When I find it, I’ll have to post a copy of a memo of the billion dollar loss at ALICO Japan from 1992 that got buried…. it was classic, and shaped my view of AIG. And, yes, part of it had to do with a guy who was not competent, and should have been let go much earlier.

Also, yes, shift the blame was alive and well when I worked there 1989-1992.

1) Managers down the chain mindlessly followed still more mindless growth goals set by senior management. It caused us to grow asset management products that couldn’t tolerate rapid growth.

2) Because of the legacy of Hank Greenberg there was a sense that if you questioned senior management you were being insubordinate. Also the tier of senior people under Greenberg were courtiers not intelligent managers.

3) Senior management didn’t understand and didn’t bother to understand what was happening in the weeds..

4) The company has a really bad shift-the-blame culture.

5) AIG doesn’t fire underperforming employees.

David, you used to work there, what are your thoughts on the culture at AIG?

It would make more sense for a holding company model in which acquisitions are made during tought times and those same acquisitions are spun off and IPOed during good times. The hitch here is the other part of the modern business paradigm–companies don’t like to have cash; thus, they have no options when credit conditions deteriorate, the best time to buy.

That said, watch the rating agencies downgrade… they are lagging indicators of the move in the stock price.