Bob Benmosche - Good for the Money: My Fight to Pay Back America

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For my grandchildren

I FIRST MET BOB BENMOSCHE in the summer of 2009. It was almost nine months after the government had bailed out AIG. The company was spiraling: battered in the press, condemned by Congress, beset by low morale, with customers and employees looking for the exits. The previous CEO had resigned that May, and Bob had been chosen to take over. I was leading our AIG efforts at the New York Fed at that time, and Tom Baxter, FRBNY General Counsel, and I were asked to meet with him before he took over.

While Id been warned that Bob was not your average CEO, it went far beyond that. The Bob I met on that day was unique, at least in my experience, in a number of ways. Id never met anyone more directhe didnt mince words in expressing his views on what had occurred to date and where he thought mistakes were made, and he gave assurances that his version of a bull in a china shop would break some glass. Id never met anyone with more energyhe spoke with his whole body and used nearly his entire range of voice that day to make sure we got a clear picture of his vision. And Id never met anyone with less of a filterI learned more about Bobs personal life in the short walk out of the building that day than I knew about many of my close friends.

My first reaction to the new CEO? Holy crap, what are we getting ourselves into?

But as Bob began to talk about the company, I realized that this man was just what AIG neededsomeone who would come in and shake things up, get people within the company out of their woe is me, Im AIG mentality. Bob had a vision for what the company could be, but was also someone who wasnt afraid to meet head-on the public outcry and Congressional uproar at the time. And right away, Bob did that. He may not have done it in the most tactful way (and that wouldnt be the first time), but he made it clear that he was fighting for the future of the company, its employees, its customers and, ultimately, full repayment to the government.

Bob took over at a time when all of us where facing unprecedented situations: there was no playbook for how to resolve a trillion dollar financial company. People expected a quick sale and a quick government exit, but this was impossible. There was great pressure to do it all fast, but that simply wouldnt workit would require a strategic plan and time to execute. This is where Bob earned his salary again and againby holding the company and the government to his plan. He would threaten to quiton more than one occasionwhen he felt he lacked support. Indeed, on one day, when compensation was being debated, he almost quit several times! I was sitting there with some board members during the back and forth, and again and again he came back to the importance of sticking up for a principle. He was trying to make a point, but he was deadly serious, and that gave him credibility. People took him seriously.

Were lucky that Bob was able to tell his story before he passed away. On one level it offers all of uscorporate leaders, government regulators, politiciansa clear vision of what to do, and, as importantly, what not to do during times of economic panic. Among the lessons that emerge:

Governance really matters when it comes to big companies. Clearly AIG had significant failings in this regard before the crisis, and Bob knew how to fix it and did fix it. The company operates much differently today than it did before the crisis.

Leadership makes a difference. Bob embodied great leadership skills; he was a master at communicating with his employees on an emotional level and breaking down complex ideas into simple principles. Great leaders inspire with great stories, and Bob always had a story. Among my favorites: Moms on the roof, which you will read more about later in these pages. Bob shared this story many times, as a way of making the point that all news, good or bad, should be shared as soon as its knownand not held back to avoid a bad reaction. He also liked to tell the story of Sandy Koufax, who decided not to pitch Game 1 of the 1965 World Series because it fell on Yom Kippur. Koufax stuck to his principles, and, for Bob, his story was about standing up for what you believe in. Great leaders also help people understand where theyre coming from by explaining things in a clear and transparent way. And they are able to connect with people at all levels of the companyBob knew peoples names, what they did, and he continually thanked them. Bob had all of these traits.

Transparency and trust are critical. Bob believed in transparency, whether it was with the government, with his employees or with the public. And it was that level of transparency that built the trust and the working partnership that was necessary for Bobs plan to work.

You are about to read one of the great comeback stories in business history; its importance isnt yet fully appreciated. When AIG paid back its government loans with interest in December 2012, it was more than just a company meeting its obligations. It was a once-great company getting a new start. It was one of the great symbols of failure in the crisis coming back to life. And practically speaking, a world in which AIG actually failed and had to be wound down completely would have been catastrophic. And AIG would not have been the only damage in that scenario. AIGs connections to businessesbig and small, here and abroad, to retirees and savers, and to millions of insured Americans meant that AIGs failure would have damaged more than just AIG.

Politics did not allow people in the government to thank Bob publically for his service, something that he often mentioned. Im confident, though, that everyone involved with the turnaround at AIG acknowledged privately the incredible service he performed for AIG and for the country.

I was no longer involved with AIG when I heard that Bob had cancer. The last time I got to see him one-on-one was in the summer of 2014, when we got together for lunch. I wanted to get some advice from Bob on how to think about my career and next steps. Bob wasas he always wassupportive and challenging. He was always looking for the next challenge for leaders he wanted to develop. It was a low point for himhis mind was as sharp and energetic as ever, but his body was failing: he couldnt eat or walk up the stairs. I saw him again at his retirement party a few months after that, and witnessed a final Benmosche performance. Person after person got up to say nice things about Bob, and then it was his turn. Without acknowledging all of the accolades, he immediately launched into a pep talk: You all have to give your support to [incoming CEO] Peter [Hancock], you have to keep making things happen. He was motivational, inspirational, sometimes hectoring (I dont want to hear any more of your shit!). That was classic Bobsupportive, leadingand that was the last time I saw him.

Sarah J. Dahlgren

THE TRUTH WAS, I DIDNT need the job.

I was content in retirement, living in the house of my dreams on Croatias Adriatic coast, puttering around in my flip-flops, tending to the little side business wed started, growing grapes for our own wine. But stepping back into the arena appealed to my sense of patriotic duty. Becoming CEO of American International Groupknown by its universally reviled initials, AIGwould be an important service to the country. AIG had almost taken down the entire global economy as a result of the role of one of its divisions, AIG Financial Products, in the calamitous subprime mortgage market. Now, it was reeling under the weight of the astronomical $182 billion in bailout funds it owed the taxpayers. The company was in such disarray that it had burned through four CEOs in four years, the last one hounded out after a humiliating dressing down by Congress.