AIG’s Miller Says Prosecutors Must Ask ‘Is Stupidity a Crime?’Laura Davison
American International Group Inc. Chairman Steve Miller said prosecutors must distinguish between management blunders and criminal actions when investigating corporate behavior.
“A lot of executives did things that, in retrospect, look stupid,” Miller said in an interview today on Bloomberg Television with Tom Keene, Scarlet Fu and Brendan Greeley. “Not sure that they violated the law.”
Attorney General Eric Holder, who announced plans in September to step down, has been faulted for resolving Wall Street probes during most of his tenure with civil settlements, rather than criminal prosecution against companies or their top executives. His record on mortgage fraud was criticized by the agency’s inspector general in a report in March.
The Justice Department closed the criminal investigation in 2010 of Joseph Cassano, who stepped down from New York-based AIG in 2008 after overseeing record losses on mortgage-related derivative contracts. He told investors a year earlier that “It is hard for us, without being flippant, to even see a scenario within any kind of realm of reason that would see us losing a dollar in any of those transactions.”
The government bailed out AIG in 2008 with a package that expanded to $182.3 billion.
“The first question, broadly speaking, going back to the crash of ’08: Is stupidity a crime?” said Miller, who became AIG chairman in 2010 and worked with then-Chief Executive Officer Robert Benmosche to help repay the insurer’s U.S. rescue.
The Justice Department this year secured a guilty plea from Credit Suisse Group AG for helping U.S. citizens evade taxes, and from BNP Paribas SA over trade-sanctions violations.
Miller also discussed AIG’s insurance operations, which have been pressured by higher-than-expected claims costs on policies written years ago.
“It’s a great business if you have the internal strength to analyze your risks and price them properly,” Miller said.