Surprise – a conflict of interests involving AIG and Goldman Sachs. These relationships make my head spin…
AIG head’s $3M in Goldman stock raises apparent conflict of interest
By Timothy P. Carney
Examiner Columnist | The Examiner
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.
Liddy is managing a company that receives taxpayer dollars to pay other financial firms, with Goldman Sachs the top recipient. While there is no reason to believe Liddy is influencing AIG actions to unfairly benefit Goldman, the situation represents a potential conflict of interest that would never be allowed in a government agency, but is permitted in the strange public-private chimeras like AIG spawned in this age of bailouts.
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.
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…
Again, there’s no evidence Liddy has ever put his own (Goldman’s) interest ahead of the shareholders’ (the taxpayers’) interest. But owning millions of dollars of stock in the leading potential beneficiary of your subordinates’ actions wouldn’t fly in government—why is it fine at AIG?
Timothy P. Carney is The Washington Examiner’s Lobbying Editor. His K Street column appears on Wednesdays.
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