After hearing the mind boggling news (to use the New York Times’ descriptor) that AIG’ is seriously thinking about joining a suit against the government, filed by its former top executive Maurice Greenberg, for the “onerous terms” it imposed when it bailed the company out in 2008, I have dusted off an old post about what William Makepeace Thackeray has to say about ingratitude. Although, thanks to its reckless risk taking, the insurance giant would have gone bankrupt had it not been for $182 billion in government loans, now Greenberg (and possibly the company) is claiming that he is the victimized one.
You may recall that even after AIG’s rampant irresponsibility was brought to light, for a while it continued in its old ways, paying its executives extravagant bonuses and providing them with luxurious retreats, one of which included an overseas hunting expedition. The retreats were canceled following public outcry, and Obama was criticized for not being angry quickly enough, which led to his famous statement, “I like to know what I’m talking about before I speak.”
Anyway, AIG became the poster child for the financial behavior that cratered the economy, cost us our jobs, and ravaged our 401K pension plans. To salvage its image, the company began an ad campaign thanking the American public for the bailout. And now this.
Think what an outsized sense of entitlement it takes to bring such a suit. In Vanity Fair, Thackeray helps us see how entitlement and ingratitude go hand in hand.
The novel has an honest old stockbroker named John Sedley who suddenly goes bankrupt following a market crash caused by Napoleon’s return from his Elba exile. Sedley has an old friend, John Osbourne, who Thackeray tells us “was under a hundred obligations to him—and whose son was to marry Sedley’s daughter.” In our drama, John Osbourne is Maurice Greenberg.
Guess who brings suit against Sedley. Although Osbourne has lost money in Sedley’s collapse, he has otherwise benefited handsomely from Sedley’s help in the past and is doing well. Nevertheless, he proceeds to prosecute Sedley for his lost money and breaks up the impending marriage of the young couple, who love each other dearly.
Thackeray explains this strange logic as follows:
When one man has been under very remarkable obligations to another, with whom he subsequently quarrels, a common sense of decency, as it were, makes of the former a much severer enemy than a mere stranger would be. To account for your own hard-heartedness and ingratitude in such a case, you are bound to prove the other party’s crime. It is not that you are selfish, brutal, and angry at the failure of a speculation—no, no—it is that your partner has led you into it by the basest treachery and with the most sinister motives. From a mere sense of consistency, a persecutor is bound to show that the fallen man is a villain—otherwise he, the persecutor, is a wretch himself.
Thackeray repeats this insight in a way that sums up why AIG could both take money from the government and claim that it had been victimized by the government:
Osborne had the intolerable sense of former benefits to goad and irritate him: these are always a cause of hostility aggravated. Finally, he had to break off the match between Sedley’s daughter and his son; and as it had gone very far indeed, and as the poor girl’s happiness and perhaps character were compromised, it was necessary to show the strongest reasons for the rupture, and for John Osborne to prove John Sedley to be a very bad character indeed.
At the meetings of creditors, then, he comported himself with a savageness and scorn towards Sedley, which almost succeeded in breaking the heart of that ruined bankrupt man. On George’s intercourse with Amelia he put an instant veto—menacing the youth with maledictions if he broke his commands, and vilipending the poor innocent girl as the basest and most artful of vixens. One of the great conditions of anger and hatred is, that you must tell and believe lies against the hated object, in order, as we said, to be consistent.
I originally used the Thackeray quote last August to understand why the GOP and Mitt Romney were focusing their attacks on Obama for his “you didn’t build that” remark, which had been wrenched out of context but which accurately captured the financial industry’s sense that the president didn’t sufficiently appreciate its entrepreneurial spirit. The anger went so deep that Romney thought he could ride it—along with white working class anger, which had its own dynamic—to the presidency. Many columns were written to explain why financiers had turned on the president after having been largely supportive in 2008. Some speculated that the president was too aloof or didn’t schmooze enough.
Thackeray provides a better explanation. The financial industry was angry at Obama and the government because of the bailout. Those that Tom Wolfe termed “masters of the universe” (in Bonfire of the Vanities, a novel influenced by Thackeray’s) were angry that their illusion of self-sufficiency had been exposed.
The current suit appears to be another manifestation of that anger. Sure, it’s also an attempt to get yet more money from the government, but shareholders are people also, and a decision to file and to join a suit like this has a psychological dimension. Most Americans find it jaw dropping that financiers would demonstrate such ingratitude, and AIGs marketing division was sufficiently aware of the perception to undertake its “thank you America” campaign. This suit shows us how Wall Street really feels.
For comic relief: Check out Andy Borowitz’s take on AIG in the on-line New Yorker. Here’s a sampling:
In 2008, you paid for a bailout of A.I.G. totalling $182 billion. Today, we are writing to tell you that we’re thinking of suing you.
When we made this decision, we knew we were in for some rough treatment from the media. We’ve been called everything from soulless bloodsuckers to Satan’s scabrous handmaidens, and worse. At A.I.G., though, we have a different name for ourselves: true American heroes.
You see, by suing the same people who bailed out our asses just five years ago, we are standing up for one of the most precious American rights of all: the right to sue someone who has just saved your life.
Update: AIG announced today that it would not in fact be joining in the suit and also “opted to ask Mr. Greenberg to stop pursuing legal claims in the company’s name.” This apparently will deal a death blow to his case. So good for them. Greenberg, on the other hand, still has some explaining to do.