According to documents obtained exclusively by Bloomberg, new AIG (AIG) CEO Robert Benmosche wants Wall Street firms taking divisions of the insurance company public to shave 50 percent off their normal fees. The news service writes that "The banks have hundreds of millions of dollars at stake in fees they planned to earn from helping AIG, once the world's largest insurer, repay its government rescue."
Benmosche may get away with his plan, which would help to justify his controversial $7 million salary for running a company in which taxpayers have invested $180 billion in debt and equity. The federal government now owns 80 percent of AIG.
The bankers and attorneys who want to profit from AIG IPOs and other transactions will face public and perhaps Administration pressures to keep their fees low as a "public service." Why should they make exorbitant profits off of their work when taxpayer money is at risk? At least that is the case Benmosche will make in the court of public opinion.
And, in an environment in which Wall Street compensation is being questioned every day, it will probably work.
Douglas A. McIntyre is an editor at 24/7 Wall St.