Thursday, October 29, 2009

Stripping For Cash

This is what you would call the Triumph of the Human Spirit. Hank Greenberg is starting over again at age 84, and taking advantage of the fatal weakness of his old firm, brought low by capricious government dictat: Maurice Greenberg Is Back, Luring Talent From Former Firm

Even as he has been lambasting the government for its handling of A.I.G. after its near collapse, Mr. Greenberg has been quietly building up a family of insurance companies that could compete with A.I.G. To fill the ranks of his venture, C.V. Starr & Company, he has been hiring some people he once employed.

Greenberg can do this because the New Order of Pay Rules has changed AIG's pay structure from incentive based to punishment based. Oddly, there are people at AIG who would just as soon go with a high wage winner like Greenberg, rather than toil away for peanuts. There are those who find something amiss in this rearrangement of the insurance industry. It's not "fair." Yeah, well neither was the AIG bailout.

While America generally loves stories of entrepreneurs making a comeback, Mr. Greenberg’s success may be at the expense of taxpayers. People who work in the industry say that if he is already luring A.I.G.’s people, he may soon be siphoning off its business and, therefore, its means to repay its debt to the government.

“To me, it’s just going to be a matter of time before the valuation of what he’s building is greater than the valuation of A.I.G.,” said Andrew J. Barile, an insurance consultant in Rancho Santa Fe, Calif.

I love this idea that Greenberg is building his new company "at the expense of the taxpayers," as if he is the only guy out there trying lure employees away from a company that combines the worst of both the corporate and bureaucratic worlds - it's low paying and high stress, plus you are the official whipping boy every time the media needs to whip up a "populist" frenzy! Now the complaint is that AIG and the other Bailed Out won't be able to grow their way back to prosperity (and re-pay the government) because they'll be staffed by time servers and mediocrities. The Pay Czar doesn't seem to have taken this into account, but entrepreneurs like Greenberg sure have.

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