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Leo W. Gerard

By Leo W. Gerard
International President

AIG Chairman Edward M. Liddy gets the Creep of the Week award for his stunning, overwhelming, dumbfounding display of cluelessness.

Liddy not only awarded $165 million in bonuses to the very AIG employees whose risky speculation in credit default swaps bankrupted the once-great insurance giant, forcing it to beg for $170 billion in taxpayer bailouts, he then claimed he was a helpless victim of retention bonus contracts written before he took over in September. Here’s exactly what he said: “Quite frankly, AIG’s hands are tied.”

No other contender for this week’s Creep prize awarded by the USW sunk close to those depths of obtuseness. And in so many diverse areas! Let’s count the ways:

First, there’s Liddy’s claim that he just can’t squirm out of contracts. Boy, he’d be the first CEO on God’s green earth to be too feeble to break a contract. Think about it: Congress insisted that the Big Three auto companies crack open their contracts with the United Auto Workers to qualify for federal bailout money. Union contracts at all sorts of companies across this country have been broken, bent, re-opened and renegotiated by cooperative labor organizations willing to accept a variety of cuts to preserve employment during an economic crisis caused by the likes of, well, let’s face it, reckless speculators at AIG! But, somehow, Liddy couldn’t find a way to break, bend, re-open or renegotiate contracts with the white collar workers who caused the mess taxpayers are both suffering and cleaning up.

Second, there’s Liddy’s claim that he had to honor the bonus contracts or he’d be sued by his employees. With a straight face, Liddy asserted that the employees in AIG’s Financial Products subsidiary who neglected to account for the possibility of a decline in real estate prices would actually list their names on court documents contending they deserved extra money after bankrupting the company. If Liddy thinks there’s a jury in America that would buy that argument and award the bonuses, I’ve got some credit default swaps I’d like to sell him. It’s clear, in fact, even Liddy doesn’t buy the argument since he’s declined to publicly release the names, though he has given a great deal of information – under duress – to New York Attorney General Andrew M. Cuomo who is working on a lawsuit to recover the bonuses for taxpayers.

Third, there’s Liddy’s failure to understand these simple facts: people who caused a company’s demise don’t get bonuses and neither do employees of companies getting bailouts with federal tax dollars. The average AIG bonus payment was $395,000 – though 51 employees got more than $1 million and the winner of the fattest bonus got $6.4 million. Liddy told Congress he has asked some of the 418 recipients to return half of their bumps. If all 418 complied, the average would decline to a mere $197,500. That may be chump change to a Wall Streeter, but it is a life-saving sum to a middle class worker who has lost his job or can’t pay his mortgage because of Wall Street’s greed and  recklessness. In addition, there’s an important reciprocal issue Liddy failed to understand: the fury he has provoked by paying those bonuses has made the middle class even less willing to invest their tax dollars in any future bailouts that Congress may claim AIG or Wall Street banks desperately need.

Fourth, there’s Liddy’s ability to treat with reverence those who caused the financial meltdown while regarding with disdain those who suffer as a result of it. It was Liddy’s contention that his white collar workers were special. He had to give them the bumps, or they would abandon AIG, refusing to clean up the mess they’d made. That didn’t apply to auto workers, though. No one cared what happened to them. They could be furloughed as a result of Wall Street’s misbehavior — and pay taxes to clean it up as their bonus. But what’s worse is the level of continued boldfaced, outright deception from Liddy and his like. The bumps were crucial for retention, he said, right? Wrong. Cuomo discovered that 11 big time bonus beneficiaries – those who got $1 million or more – had already left AIG.

Fifth, Liddy acted as if the American people didn’t already own 80 percent of his company. Earlier this month, after AIG reported a $61.7 billion quarterly loss, the largest in corporate history, the federal government promised to help prop it up by giving it another $30 billion in taxpayer dollars. The solution here is simple, as the Washington Post pointed out in a story last week. If the feds simply insist on a 100 percent share of the company, which, frankly, the American people deserve for that kind of investment, the bonuses stop.

In addition to Creep of the Week, Liddy gets a special bonus award: Clueless of the Week.

Leo W. Gerard

By Leo W. Gerard

International President

Creep of the Week is a special award bestowed by the Untied Steelworkers on a corporate scoundrel or political bobble-head nodding to anti-worker demands. The awardee must, however, be human — not a demon, or robot or avatar. This week’s winner is former Merrill Lynch Chief Executive Officer (CEO) and Expensive Toilet Connoisseur (ETC) John A. Thain.

Thain’s behavior has been so cartoonish as to suggest he’s a soulless concoction of Marvel Comics. A Wall Street villain: Thain – the bond-shark who spends more on a commode to festoon his office than most Americans earn in a year!

Even James Post, a management professor at Boston University, suggested that Thain was more of an avatar than a human when talking to the AP about him and other Wall Street CEOs who spent $18 billion on year-end bonuses after getting $350 billion in taxpayer dollars to bailout their failing financial companies, “Thain is a symbol of the species. It’s a breed that I think is going to have to change its habits, at least for a time.”

But here’s proof that greed hasn’t completely converted Thain’s soul into a black hole: he paid his chauffeur $230,000 for a year’s service. That, of course, included an $18,000 bonus, about half of what the average American makes for an entire year’s work.

The fact that Thain paid his driver more than what a U.S. Supreme Court justice earns probably says more about what Thain thinks of his own value than what he believes the chauffeur deserved. Still, Thain could have stiffed the guy. Which means, somewhere under all that arrogance and excess, there’s a human. Thus, he qualifies for the award.

The Creep of the Week prize doesn’t come with cash, something Thain will be completely unaccustomed to. This is a guy who slipped his staff at Merrill $3.6 billion in bonuses, including 700 at the $1 million and above level, and did it deliberately in December, a month earlier than usual. That way, they arrived just days before reports of Merrill’s $15 billion fourth quarter losses. And the bonus checks got cashed just days before Bank of America completed its take over of Merrill. BoA may well have cancelled all of the bonuses that weren’t contractually required because they were, in effect, a reward for losing Merrill a grand total of $27 billion that year.

And, BoA had to slither back to taxpayers and beg for another $20 billion from the bank bailout fund to help it complete the Merrill takeover after it discovered the extent of the losses at the brokerage firm.

Even so, Thain thought he should cash in on those bonuses too. After all, he had given his driver one! He planned early in December to ask the BoA board of directors for a $10 million bump just for himself – until bad publicity made him think the better of it.

Then, just last month, BoA’s CEO dumped Thain, placing him among the nearly 600,000 Americans thrown out of work in January. And just after he’d agreed to reimburse the company for that $1.2 million he’d spent renovating his personal office — including his $35,000 ornamental, non-flushable toilet!

Don’t cry for Thain, America. While the typical U.S. worker counts his annual wage in thousands, Thain tabulated his in millions. In 2007, he was the highest paid CE0 on Wall Street, taking $83 million in compensation out of the financially-struggling Merrill. As 7.6 percent of Americans are pinching pennies on the unemployment line, he’ll be squeezing megabucks in the lap of luxury.