"3 (Little Known)Trustees of A.I.G. Are Quiet, Perhaps to a Fault." No Office, Staff or Mission

[KoKo]

:wtf:


April 20, 2009
3 Trustees of A.I.G. Are Quiet, Perhaps to a Fault
By EDMUND L. ANDREWS

WASHINGTON — In an early sign of just how tricky corporate governance has become in the era of taxpayer bailouts, three little-known trustees with no office, no staff and almost no mission will soon be deciding questions that affect the fate of American International Group, the giant insurance company.

The trustees include a retired Wall Street executive, the head of a Texas pipeline company and the chairwoman of a firm in Bermuda that provides administrative services to hedge funds.

Even though the government has bailed out A.I.G. with $170 billion in federal money, and even though the Treasury owns nearly 80 percent of its shares, the voting power is in the hands of the three trustees.

Yet for all their responsibility, the trustees have studiously remained invisible to the public. Even after the nationwide uproar last month over bonus payments made to A.I.G. executives at a time when taxpayers were rescuing the company from collapse, the trustees have said nothing in public about their activities or their plans.

The unusual arrangement will face its first test next month, when A.I.G. holds its annual shareholders meeting. Dissident shareholders, led by labor unions, are pushing for shareholder votes to oust an A.I.G. board member and to further restrict executive pay.

Fed and Treasury officials are likely to resist additional pay restrictions, fearing they would aggravate the exodus of crucial employees and make it even harder for A.I.G. to repay taxpayers. That could leave the trustees, who are each being paid $100,000 a year, in the awkward position of having to vote on a proposal that many taxpayers might support but that the government opposes.

The arrangement has raised questions about who really is in charge when the government bails out a major financial institution. Those questions could soon spread far beyond A.I.G.

The Treasury Department is poised to become Citigroup’s biggest shareholder, obtaining as much as 36 percent of its voting shares, and officials plan to turn over those shares to outside trustees as well. And if any of the 18 other large banks now undergoing government “stress tests” are told they need more capital, the government is likely to acquire more voting shares and turn them over to trustees, too.
Some analysts say the setup provides cover for officials who, despite the government’s large stake in various banks, want to preserve the notion that neither the Treasury nor the Fed “owns” A.I.G. or controls any major banks.

http://www.nytimes.com/2009/04/20/business/20trustees.html?_r=1&partner=rss&emc=rss