Thinking about the current challenges of being a financial services CEO, I was reminded of the corny but memorable song "That's Life," in which Frank Sinatra observed: "That's life, that's what all the people say/You're riding high in April, shot down in May/But I know I'm
gonna change that tune/When I'm back on top, back on top in June." How many chief executives were extolled as visionary leaders as recently as a year ago, only to be vilified today as architects of the global financial meltdown?
The executive who has been "shot down" most publicly in recent weeks has been Ed Liddy, the former Allstate Insurance chief who was named CEO of American International Group this past fall following the insurance company's request for a massive government bailout. I have to wonder if Liddy misses retirement -- he can't be having a whole lot of fun in his current role as CEO of AIG.
For a few weeks in March, Liddy was the punch line du jour. It has seemed as if no matter how hard Liddy has tried to do the right thing -- committing to transparency, canceling conferences, restructuring operations -- it either has backfired or another mind-boggling development has derailed his best intentions.
When Liddy told the Treasury Department in March that AIG planned to pay $165 million in bonuses to executives from the company's notorious Financial Products group, the resulting firestorm must have made him nostalgic for the days of dealing with Hurricane Katrina claims. It may have been that Liddy sincerely believed he had no alternative than to pay the bonuses, and I have no way of knowing if he actually was surprised by the public backlash.
At press time the furor over the bonuses had quieted somewhat, providing an opportunity to step back and examine how to judge an executive such as Liddy, who came out of retirement to take the AIG job. There may have been some ego involved in his decision, but the bottom line is that he did not create the AIG mess and, in fact, stepped in as CEO as an act of public service. That he so quickly became a target of scorn and derision shows that even the most savvy executives can underestimate the current economic, political and media environment. But, who knows -- wait a few months and Liddy may well be "back on top in June."