Edward M. Liddy grew up in New Brunswick, New Jersey, earned a bachelor’s degree from Catholic University of America in 1968 and a master’s in business administration from George Washington University in 1972. He then began a long career in corporate America, including stops at the Ford Motor Company in Detroit, drug maker G.D. Searle & Co in Skokie, Illinois, and Allstate Corporation in Northbrook, Illinois.
During Edward Liddy’s apprenticeship in the buccaneering life he was exposed to the most influential teachers and lasting experiences. While at Searle, Liddy who was CFO worked for a CEO , Donald Rumsfeld, who has always epitomized the height of arrogance as demonstrated by a successful buccaneer. When he was at Allstate, Liddy presided over the company during and after hurricane Katrina, and Liddy observed first hand the effects of over exposure to risk and subsequent loss of trust when Allstate was faced with the massive losses suffered by homeowners in New Orleans, and Allstate subsequently canceled insurance policies and exited the business of insuring homeowners against casualty, lucrative as the business might have once been and could be.
He joined Clayton, Dubilier & Rice, a private equity firm operating in New York and London in 2008, and became a partner for a brief time, before being tapped for his latest expedition in the world of corporate insurance and finance.
Liddy who was a former director of Goldman Sachs (elected in 2003 when Goldman Sachs’ CEO was Henry Paulson, who would go on to be treasury secretary under George W. Bush), was then appointed as CEO of AIG after the ouster of Robert Willumstad by Paulson when the federal government seized AIG in June of 2008.
Throughout his apprenticeship, Edward Liddy was trained by the masters, and had plenty of practice in the art of separating the gullible from the coin of the realm. He became a wizard of the sorcery of making other people’s money in to greater treasure for himself and his backers, while exposing little, if any assets of their own, as part of the risk or underlying cost to produce the treasure chest. In June of 2008, Edward Liddy took the helm of one of the largest privateers ever to sail the financial oceans, which was crewed by a host of cut throat pirates, AIG. Liddy embraced his new shipmates with gusto, when in October of 2008, after United States taxpayers had sunk $84 billion in to loans to AIG to address its insolvency, he defended the decision of his fellow buccaneers to blow $400,000 on a corporate junket to the St. Regis Resort in Monarch Beach, California. In his subsequent testimony before the U.S. House Oversight Committee, Liddy stated that such retreats “are standard practice in our industry.”
Despite being hired by the American people to bring a sense of order, and propriety to AIG, to manage the remaining assets of AIG, to take appropriate actions to staunch the flow of more good money after bad money on behalf of the American people, Edward Liddy hoisted the pirate flag ever higher on his mast when he refuted the wishes of the president of the United Statess and the American people in his letter to Treasury secretary Timothy Geithner on March 14, 2008. Liddy refused to back down on the demand that he rescind the multimillion dollar bonuses paid out to the AIG staff and managers that were responsible for the company’s massive losses in 2008 which resulted in its take over by the United States government.
In closing his letter to the Treasury secretary, Edward Liddy had the pure arrogance to state:
I would not be doing my job if I did not directly advise you of my grave concern about the long-term consequences of the actions we are taking today. On the one hand, all of us at AIG recognize the environment in which we operate and the remonstrations of our President for a more restrained system of compensation for executives. On the other hand, we cannot attract and retain the best and brightest talent to lead and staff the AIG businesses – which are now being operated principally on behalf of the American taxpayers – if employees believe that their compensation is subject to continued and arbitrary adjustment by the U.S. Treasury
Edward Liddy seems to have forgotten any early education he might have had at Catholic University of America and George Washington University relative to human moral values and business ethics. Mr. Liddy also seems to have never learned anything about Actuarial Science, which is defined on Wikipedia as:
Actuarial science is the discipline that applies mathematical and statistical methods to assess risk in the insurance and finance industries. Actuaries are professionals who are qualified in this field through education and experience. They must demonstrate their qualifications by passing a series of professional examinations.
Instead of sound, prudent, ethical business practices, instead of recognizing his fiduciary responsibility to the owners of AIG (the American taxpayers), Mr. Liddy is concerned about losing the services of those negligent AIG management and staff who made the decisions, made the deals, sold the dubious credit default swap “products” which destroyed the financial viability of AIG. The people and institutions who created, promoted and sold credit default swaps, the people and institutions who packaged the obviously dubious mortgage derivative products that were based upon substandard, and likely in many cases, patently fraudulent loans. The “financial geniuses” at the top of the buccaneering clan, who through gross negligence, if not out and out greed and avarice, who administered the coup de gras to our financial system, might not be incented to continue providing their “expertise and services” to those of us who ultimately are footing the bill for their egregious performance. This attitude, conveyed by Edward Liddy is the height of arrogance.
Maybe it is a Wall Street thing, or more precisely a buccaneering thing. That regardless if someone who may have a prior history of prudent management as an executive in the early stages of his career, may have an educational and work background that indicates a high level of intellectual development, that once that person becomes a member of the Wall Street financial plutocracy, the buccaneering clan, that person loses all ability to identify with or understand or empathize with the lot of the vast majority of the common folk who make up the population of the United States. Those common, hard working folk who through their consumerism, those folk who through their efforts to build their own bit of shared wealth and provide for their families, those folk who sacrifice and try to put something away for the future higher education of their children, those folk who manage to put something aside for their future retirement, so they will not be a burden upon their families or society when they are too old and infirm to work.
The common folk do not exist in the mind or the sphere of influence that the Wall Street managers cocoon themselves in, the world of buccaneers sailing the financial seas on their privateers, trolling not just for gullible common folk, but actually any person or entity, even relatives in the buccaneering clan itself, as targets of opportunity. Once arriving on “the street”, the Wall Street management and sales classes become mesmerized by the riches they see available for plucking, and embrace their role as a part of a buccaneering clan, becoming drunk on their booty. They sneer at the rest of us awash in the roiling seas in their wake, secure in their superior position aboard their privateers, arrogant til the end of time.
The only thing that will hinder, if not sink the current crew of buccaneers, will be to relieve their captain of duty, and clawback, a very apropos term, the treasure distributed as bonuses, and for those crew members who did not already jump ship, even after being paid “retention bonuses”, make them walk the plank. AIG and the American tax paying public do not need to bribe cut-throat pirates to stay aboard while the mess on the deck of AIG is swabbed up, there are plenty of other, honest, ethical, qualified members of the financial seafaring community who are capable of passing out life vests and unwinding the remaining risk exposures at AIG.