It seems like less than 3 months ago that Robert Benmosche went on holiday for a month to his palatial villa in Croatia, a week after joining AIG as CEO, coming out of retirement to do so. That's because it was less than three months ago. Now he says he wants to quit because of the hassle he is getting from the government over paying market wages to his staff.
This is a fine example of the problems that governments get into when they bail out commercial companies and in particular banks and other financial institutions. This is over and above the "moral hazard" whereby a bank can act recklessly in search of higher profits knowing that the government will bail them out if it goes disastrously wrong.
This is the problem that once the government has sunk tax payers cash into the company as risk capital to rebuild the company, they are unlikely to be able to change the corporate culture and return the company to profitability. Bear in mind that the company that requires government support was probably not running an effective strategy and any recent profits may have been largely illusory on the bass that there were vast exposures that were not accurately recorded in the accounts (although technically probably not misstated).
The two options are broadly, to keep the same culture and competitive salaries and risk another failure, or to impose government constraints on pay and other practises and risk seeing all of the talented employees hired away. Either way the government stands to lose its shirt. This isn't like nationalising a naval shipyard that can be bolstered with a long-term order book. This is about putting cash into the most volatile industry in the world, where billions can be lost in an instant.
The lesson is that we don't want banks that are too big to fail because governments don't know how to manage them once they have been kept from failing. Now, on top of their problems, the US government may have to find a replacement for Mr Benmosche.