AIG head’s $3M in Goldman stock raises apparent conflict of interest
By Timothy P. Carney
Examiner Columnist 4/10/09
Edward Liddy, CEO of government-run AIG, still owns more than $3 million of stock in Goldman Sachs, which has pocketed $13 billion or more of the $170 billion federal officials have spent bailing out the ailing Wall Street insurance giant.
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Liddy, according to an AIG spokeswoman, “views his role as CEO in essence as a public service.” Liddy has been charged, in effect, with protecting the unstable American economy and taking care of the taxpayers’ money.
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As we saw with the political eruption over the bonuses his company paid out last month, Liddy needs government approval for his actions. The federal government owns 79.9% of AIG, and so Liddy, in effect, works for the government. In theory, then, Liddy works for the American people.
Yet he is not covered by the same ethics and financial disclosure rules that govern real government employees, specifically, conflict of interest rules don’t apply to him. Thus, Liddy observed in a recent Washington Post oped that “my annual salary is $1. My only stake is my reputation.”
But he has acute financial stake in one of AIG’s counterparties—namely, his $3.2 million personal investment in Goldman Sachs.
Liddy served on Goldman’s board of directors until September 2, 2008, when Treasury Secretary Hank Paulson called on him to take the reins at newly bailed-out AIG, now 80% owned by the federal government.
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The reason that Senator Judd Gregg, the most fiscally conservative member of the Senate, authored the TARP bailout of the banks, was that Gregg had millions of dollars invested in Bank of America stock.
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