Written by:
Will Pickering

Princeton Alums Defend AIG in Wake of Bonus Backlash

Following AIG's disclosure that it had paid out more than $165 million in bonuses, the public outcry became so severe that the company advised its employees against wearing AIG clothing and identification in public. Given that the insurance giant received over $170 billion in bailout money, indignation that the money was spent at least partly on undeserved bonuses is certainly justified. But media coverage of the controversy often failed to distinguish between those parts of AIG which contributed to the current financial meltdown and received unmerited bonuses, and the other divisions of the company which were innocent of wrongdoing. A number of Princeton alumni currently employed by AIG expressed just this point in a recent Daily Princetonian article:

AIG economist David Garlow ’66 said he thinks there are two AIGs: the “very small section” responsible for the company’s bad press and economic woes and the much larger portion which played no role in the company’s financial decisions.

"From the perspective of a person who’s working at AIG, it’s a little disheartening to be tarred by the same brush that other people are being tarred," Garlow said. "It's not rocket science: We sell insurance. Our operations have been running smoothly and are 'plain vanilla' ... Some of the stuff we do is more exotic but it doesn't involve taking many risks."

One Princeton alumnus who is a junior-level employee at AIG's corporate headquarters blamed the sale of high risk derivatives by the company's primarily London-based Financial Products unit for the company's tough financial straits. She spoke on the condition of anonymity for fear of losing her job in the pending "third round of layoffs."

"The ninety percent do everything we're supposed to do," she said. "It’s a very small unit of the company that caused the liquidity [problem] … The rest of the company was solid and profitable."

Check out the full article.