New Director Leads AIG CEO Search
By Lilla Zuill
May 29, 2009
A search for a successor to Edward Liddy, chairman and chief executive of AIG, is being led by board member Dennis Dammerman, according to a source familiar with developments.
The search, which is expected to take no more than a few months, is being undertaken after Liddy, picked by federal officials to run American International Group Inc. at the time of the insurer's bailout last September, said he wants to step down. He made the announcement last week.
Dammerman, a retired vice chairman and chief financial officer of General Electric Co., was named to AIG's board last November, also picked by government officials.
He is one of several new directors appointed in recent months. The board is expected to have more new faces soon, with five other directors due to be elected at AIG's annual meeting next month, nominated by trustees of the government's stake of nearly 80 percent of AIG.
An AIG spokeswoman had no comment on Dammerman being appointed to lead the executive search.
Liddy, who took the job for a salary of $1, has recommended to the board that they find two candidates to succeed him, splitting the CEO and chairman roles.
In an interview with Reuters last week, Liddy said he expected the person picked as chairman to be someone familiar with the workings of government, while the CEO post should go to someone willing to commit up to five years to the job.
When Liddy was named AIG CEO last year he was the third person to hold the job in as many months, replacing Robert Willumstad, who succeeded Martin Sullivan in mid-June.
Liddy's eight-month reign at AIG has been marked by two upbraidings he received from lawmakers during Congressional hearings about the company's use of bailout funds, including bonuses paid to executives of a controversial financial products unit.
AIG is in the midst of a massive restructuring, as it tries to sell or spin off both domestic and international assets to raise enough money to pay back about $85 billion borrowed from taxpayers after large losses from derivatives written by AIG Financial Products.
California Commissioner Warns Insurance Agents, Brokers About Scam
May 29, 2009
California Insurance Commissioner Poizner warned California licensed insurance agents and brokers to beware of a scam. According to the Department of Insurance, individuals have been reportedly calling licensed insurance agencies and representing themselves as employees of the California Department of Insurance. These individuals, pretending to be CDI employees, have requested payment for a penalty fee due to not completing a fictitious form that they purport the department sent to the agencies. The same individuals also requested that the insurance agencies provide credit card information over the telephone to make the penalty payment and to avoid cancellation of their license.
Commissioner Poizner warns all agents and brokers that these individuals are not employees of the California Department of Insurance and are attempting to scam insurance agencies for financial gain. It is not the policy, practice or procedure for the California Department of Insurance to request credit card information over the telephone.
If agents and brokers receive a telephone call requesting this information, they are advised not to provide the caller with any personal information including credit card or social security numbers. They also should contact the local law enforcement agency.
Enforcement officials are actively investigating this scam.
Source: CDI
Obama Regulatory Overhaul Features Fed Reserve, FDIC, Consumer Agency
By Jim Kuhnhenn
May 29, 2009
Obama administration is proposing that the Federal Reserve serve as an all-seeing regulator to detect activities that could pose risks to the entire financial system.
Under a plan circulating among key lawmakers, the administration also is recommending a new agency to protect consumers and another aimed at protecting investors and maintaining the integrity of the markets.
The Federal Deposit Insurance Corp. would get expanded authority to unwind troubled bank holding companies and a new government agency would conduct "prudential regulation,'' supervising state and federally chartered depository institutions, bank holding companies and insurance companies.
The sweeping proposals are part of six regulatory overhaul recommendations designed to address weaknesses in the financial system that contributed to the current crisis. People familiar with the plan say details still need to be hammered out. They spoke on condition of anonymity because the proposals aren't final.
"The president is committed to signing a regulatory reform package by the end of the year and officials at the White House and the Treasury department are continuing work with Congress on the final phases of a proposal,'' White House spokeswoman Jen Psaki said. "But there is no final proposal in place and any announcement will not be for a couple of weeks.''
Obama will be traveling in Europe and the Middle East next week.
Treasury Secretary Timothy Geithner and other administration officials have discussed the regulatory proposals in the past. But the plan circulating on Capitol Hill indicated that the ideas are beginning to come together into a formal package for Congress to consider.
The plan to create two protection agencies -- one for consumers and the other for investors -- appears to address a potential turf fight with regulatory agencies.
The consumer protection agency would focus on financial products but exclude securities, defusing objections raised by Securities and Exchange Commission Chairman Mary Schapiro. Last week, Schapiro said any new agency whose oversight would include mutual funds, a form of securities, would chip away at the SEC's powers. She said that giving any new entity authority over mutual funds would lessen the government's protection of investors, her agency's core mission.
The investor protection function could be carried out by an agency that merges the SEC and the smaller Commodity Futures Trading Commission, which oversees the trading of oil, gas and other commodities.
By expanding the FDIC's role, the administration would give the government a centralized means for addressing failing banking institutions. Scores of bank holding companies, such as Citigroup Inc. and Bank of America Corp., fall under the supervision of the Federal Reserve. The FDIC now can take over and resolve only the subsidiaries of bank holding companies that take federally insured deposits.
FDIC Chairman Sheila Bair earlier this month suggested to Congress that it give her agency new authority to take over and resolve bank and thrift holding companies-- before the overall revamp of financial rules is finished. That stirred a sympathetic response from several members of the Senate Banking Committee.
Lawmakers have been divided on whether the Fed should act as an overarching "systemic risk regulator,'' with some arguing that such a task would stretch the central bank too thinly. Both Bair and Schapiro have objected to making the Fed alone the new supercop for "too-big-to-fail'' financial companies.
Bair has advocated the notion of a "systemic risk council'' to monitor large institutions against financial threats, to include Treasury, the Fed, the FDIC and the SEC. Schapiro favors that idea, saying she's concerned about an "excessive concentration of power'' over financial risk in any single agency.
Scott Talbott, senior vice president of the Financial Services Roundtable, said his industry group opposes the creation of a consumer protection agency that focuses on financial products, but welcomes overall regulatory changes.
"It is comprehensive and necessary to strengthen the system to prevent this from happening again,'' he said.
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Associated Press writer Marcy Gordon contributed to this report.
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