Lately, key phrases in the news are “the economy is down” and “we’re in a financial crisis”. Jobs are being lost by the thousands – according to the United States Bureau of Labor Statistics’ Employment Situation Summary, as of February 2009 unemployment was at 8.1%. By August, The Financial Forecast predicts it will reach 10%.
So what does this mean for insurance giant AIG? In the midst of the crisis, demand for more transparency has grown louder and louder. Without knowing who bailout money goes to and for what purpose, people will lose trust (according to Rep. Elijah Cummings commenting on the AIG situation in the Washington Post). The problem is that the company is making little to no effort to involve anyone via any medium-let alone a social one.
AIG is in a crisis of its own – a transparency crisis. In the article “Kohn on AIG”, Federal Reserve Vice Chairman Donald Kohn claims that revealing too much information might disgrace those named, thus breaking possible future business ties. But if AIG does not disclose more information, they may lose ties themselves. It is truly a conundrum. Eventually (10 days after the statement), AIG revealed a list of names.
AIG has no transparency policy and in the AIG Story of their webpage only mentions transparency once (explained as a future effort on their part). In his article, “AIG Needs Transparency Now”, Felix Salmon urges the government to get more transparent because it owns AIG and thus knows all of its information. It is necessary that the government, AIG and its counterparts open up because the information is out there already. As transparency is key, the government and AIG are looking down a dark tunnel of more confusion and distrust if they do not open their doors.
March 20, 2009 at 4:52 pm
This AIG situation is more of a crime than a conundrum in my mind. These individuals used their knowledge to basically con the American people. Concerning transparency”revealing too much information might disgrace those named, thus breaking possible future business ties,” is exactly the problem. If having transparency will out these white-collar criminals then who are we really trying to help right now, the 8.1% unemployed Americans, or the executives who are more worried about their own million dollar futures. It is absurd that these peoples names were protected for so long and truly a disgrace to how our insurance agencies are currently run. The only light I see at the end of the tunnel is that we will learn from these mistakes and use them so as to not repeat history.
March 20, 2009 at 5:10 pm
I agree with you, this whole situation is such a mess. I like your point about who transparency helps. In fact, I’m going to research this an post a follow up on just that. who really benefits from AIG’s transparency or lack there of? Very interesting…