AIG office flies under radar of Conn. town

WILTON, Conn. -- The money managers who helped ignite the world financial crisis didn't operate in a gleaming corporate penthouse overlooking New York Harbor, but on a trading floor in a two-story brick office building with a view of a Mobil station.

At AIG Financial Products here, the riskiest of business was conducted in the blandest of settings.

Through deals involving complex derivatives contracts, AIG Financial brought its corporate parent to the edge of insolvency. That threatened to wreck the global financial system, which prompted the U.S. government to approve a $170 billion corporate bailout, the biggest in the nation's history.

President Obama, members of Congress and ordinary Americans expressed outrage this week after disclosures that AIG had just paid bonuses totaling more than $160 million to employees in this same unit.

When it comes to AIG Financial, people in this affluent town of about 18,000 are angry, protective, embarrassed or even oblivious to the notion that their town figured so prominently in the financial meltdown.

"I can't believe it — I had no idea they were here," says Marilyn Gould, a former member of the Board of Selectmen, a Planning and Zoning Commission member and director of the Wilton Historical Society.

AIG Financial settled here nine years ago. Wilton is only an hour's drive from Manhattan. But in style, its executives were light-years from swashbucklers like the suspendered, pinstriped Gordon Gekko, who claimed in the 1987 film Wall Street that "greed … is good."

The AIG workers, residents say, dressed comparatively casually, in slacks, sweaters and shirts. "They were just very quiet," says Ted Hoffstatter, a high school teacher and one of the town's selectmen. "Most people didn't even realize they were here."

There was an AIG team in a local men's basketball league. Otherwise, the employees worked long hours, ate well — the company provided up to three meals a day on the job — and kept their heads down.

As news has spread of AIG Financial's bonuses, reactions have varied.

"It's outrageous — people are very upset that an awful lot of people seem to have made out like bandits," Hoffstatter says. "People are losing their jobs and when they see these bonuses being given out, they can't believe it."

One is Ed James, who was laid off from his real estate consulting job two months ago. "I hold them responsible for the pickle we're in," he said of AIG. "What they did was reprehensible."

Not everyone agrees — especially the co-owner of AIG's favorite pizzeria.

Dan Letizia, who has kept AIG workers in mushroom and pepperoni, describes them as "good, hard-working family people who are just stuck in the middle. Congress is using them as a scapegoat to cover up what they should have been keeping an eye on themselves. I'm not saying they didn't do anything wrong, but this is like Armageddon." He says the blame at AIG rests with "higher-ups, not the everyday people working there now."

David Bloomer, a retiree, bemoans a "hysteria" over the bonuses that he says distracts Congress from the larger problem. Compared with the sums at stake, he says, the bonuses "are not even statistically significant."

Some residents rue their town's association with the crippled financial giant, but Bloomer says: "I'm not concerned about where this situation started … (but) about finding a solution."

Wilton is the epitome of suburban elegance — winding back roads, rolling hills, large colonial houses — but lenders have foreclosed on more than 40 homes. Hoffstatter says people "used to be thrilled to get a raise or a promotion. Now they're thrilled if their company goes through a reorganization and they're still there."

In testimony Wednesday before Congress, AIG chairman Edward Liddy said the company had received death threats. More security guards now patrol the parking lot. AIG Financial is now a shrinking group of about 100 employees trying to extricate the firm from its complex deals.

Letizia says his business generally is good — "people are eating more pizza these days" — but AIG orders are way down. "It's been a great relationship," he says. "I'm sorry it had to come to this."