The Good Liddy

I happened to be able to see the live testimony of Edward Liddy of AIG before a congressional committee today. I was very impressed with his leadership and forth-rightness in what was obviously a set of House members that were "loaded for bear". He answered each of their questions and had a valid point of view on the situation. He described AIG's Financial Products business, where all the trouble occured, as having a large book of business (over $2 trillion) that needed to be unwound in an orderly manner. His strategy was to direct the current AIG personnel to do that, and if they did that successfully, they would earn their contracted retention bonus. From what he described, this process was working well, in distressed market conditions, and the size of the portfolio had been successfully reduced to $1.6 trillion.

Hw indicated that he knew the "retention bonus payments" would cause an adverse reaction, but he was balancing that against the risk of not having experienced personnel on board to be able to efficiently manage the reduction of the remaining $1.6 billion in a manner that would yield the best return to the American taxpayer.

There will be more to come on this story, but my impression of Edward Liddy was very positive, in contrast to the last "famous" Liddy to come to Washington, the infamous G. Gordon Liddy from the Nixon administration. I'm happy that we have "a good Liddy" in the center of this crisis.