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AIG's Benmosche Puts Wall Street's Foot in his Mouth

NEW YORK (TheStreet) -- American International Group (AIG) CEO Robert Benmosche's grandfather, Herman, escaped persecution in Lithuania to come to America. Most American families can tell similar stories.

African-American families, on the whole, can't. Their persecution began the day they came here, as slaves. And it didn't end with slavery, but continued for a century in the form of chain gangs, lynch mobs, and poll taxes across the South.

I would argue it's continuing today in the form of voting restrictions, gerrymandering and the creation of cities designed to keep tax income from being shared across racial lines.

My neighbors and I can tell that story from personal experience.

So Benmosche's claim the criticism of Wall Street for its bonuses in the wake of the 2008 crash was "just as bad and just as wrong" as the rhetoric that provoked lynchings across the Deep South 100 years ago was a bit more than a "poor choice of words," as a company statement put it.

It was a rank piece of stupidity that is going to resonate for some time.

For one thing, not all of lynching's victims were black. Leo Frank, lynched just 15 miles from my Atlanta home in 1915, was Jewish. The motive of the lynch mob was that he was a manager, thus relatively wealthy and able to afford a lawyer so he could be acquitted of a murder. Maybe Benmosche even saw the Broadway musical based on that case, Parade.

The Columbia Journalism Review notes that the Wall Street Journal, which took the lynching quote, tried to save Benmosche embarrassment by burying it but it was quickly found, tweeted, retweeted and then used by at least one black Congressman in a call for Benmosche's firing.

Even more troubling may have been Benmosche's claim, in the same interview, that the problem of "too big to fail" has now been solved. That would be news to John Thain, the former Merrill Lynch CEO now running the CIT Group (CIT), who told CNBC last week the problem has not been solved and may be too complicated to solve.

As tone-deaf as some politicians sometimes seem, it can be the same with businessmen. Each time one puts his foot in his mouth and chews thoughtfully, it hurts everyone.

Stock quotes in this article: AIG, CIT, CS, MET 

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