Heartfelt Hank
AIG's deposed CEO Greenberg gave for the office

1. Shining Starr

He's been gone barely a week now, but already retirement has been good to Hank Greenberg.

Leaving AIG (AIG) - Get Report has let the longtime CEO show off a side Wall Street might not have seen before.

This week a picture emerged, even as regulators and prosecutors probed AIG's accounting and business practices under his decades-long reign, of a Hank Greenberg who is downright benevolent -- even generous to a fault.

This development might come as a surprise to some people. For years, Greenberg was regarded as an intimidating, exacting taskmaster who wasn't shy about shouting down employees or analysts. He managed to drive two of his sons, Jeffrey and Evan, out of the company with his sharp edge and manic pace.

Lately, investigators have turned their attention to an outfit called Starr International that's run by Greenberg and has handled long-term incentive pay for some AIG execs. The arrangement meant that some AIG hard-hitters were working at one place and getting a big chunk of compensation from another.

But where some gadflies see things like potential conflicts of interest, the bigger-hearted among us see something very different. In this case, charity.

In fact, we learned that was the motivation behind Starr from no less an authority than David Boies, the media-savvy superlawyer recently retained by Greenberg. He said so on Charlie Rose's PBS interview show Monday night.

"For 35 years, what they've done is they've transferred wealth from Hank Greenberg and the other people who founded Starr International to the employees of AIG," he told Rose. "I mean, it's the greatest act of corporate charity

that you can imagine. But it's complicated to explain, and it's the kind of thing that can be misunderstood and get people in trouble."

Needless to say, Boies isn't the only one seeing it that way. Hank Greenberg himself has said so in the past. "It was one of the greatest acts of charity from any group of shareholders," Greenberg once said of Starr's founding,

The Wall Street Journal

reported this week.

Of course, Boies isn't the first to play the charity card with a client in the hot seat. Bernie Ebbers' lawyer, Reid Weingarten, boasted to the jury in the ex-WorldCom chief's trial that Ebbers quietly gave $100 million to charity.

Certainly Greenberg's not in the same straits as Ebbers was. No charges have been filed against him. Even so, the sweetness-and-light act can get a little cloying.

"He's a leader in foreign relations," Boies said of Greenberg. "

He serves on numerous charitable boards. He's devoted his entire life to building this business and to public service. He never would have done anything if he thought it was wrong."

We would like to take the charitable view of this whole business, but haven't we heard that one before?

Give Us Your Tired, Your Rich
Pick Morgan Stanley's new CEO

2. Old White Shoe

A bit of a leadership vacuum seems to have developed at

Morgan Stanley

(MWD)

. But you, gentle Five Dumbest Things reader, have the power to fill it.

CEO Phil Purcell hasn't been inspiring much good will lately. Several top execs have left the big brokerage house in the wake of Purcell's latest penthouse shake-up. Meanwhile, a group of big shareholders continues to call for his head.

Ex-chief Parker Gilbert and his cronies would like to install former President Robert Scott to run the firm. They say he would reverse the damaging talent drain of recent weeks and pursue a more-open approach that would reinvigorate the company.

That may well be so. Still, Scott is the guy who, on TV the other day, blamed both the 2000 market bubble and Purcell's meddling for the mediocre performance of various Morgan Stanley businesses while he was in charge of them. Purcell pushed him out in 2003. Those are hardly CEO-quality leadership traits, we think.

This is where you come in. We need Five Dumbest readers to step up and suggest the best possible CEO for Morgan Stanley. Certainly there's no shortage of executive talent out there. Why, it seems Michael Eisner will be much less busy in a matter of months, and Hank Greenberg's plate seems pretty empty, even as we speak.

So rack your brain and send your gold-plated recommendation along to the Five Dumbest Things lab in care of our mailroom at

cbarr@thestreet.com. The stakes are high: The first 10 respondents win a copy of

Jim Cramer's Real Money: Sane Investing in an Insane World.

Better yet, the winner gets a copy autographed by Jim.

Happy head-hunting!

No House of Pain for This Hank
Painkiller-perplexed Pfizer is phat for CEO

3. Ouch

Timing hasn't been a real strong point at

Pfizer

(PFE) - Get Report

lately.

The New York-based pharmaceuticals giant won Wall Street's praise this week by pledging to slash annual costs by a staggering $4 billion. That will mean some job losses but should make Pfizer more competitive in the future, the company indicated. Pfizer's stock rose 4% Tuesday.

Just two days later, though, the Food and Drug Administration scuppered the company's rosy projections by asking it to pull its Bextra painkiller and slap a so-called black box warning on its Celebrex arthritis pill as well. The FDA's decision came as the agency moved to inform the public of the risks of so-called nonsteroidal anti-inflammatory drugs.

"This recent news is at odds with the company's assertion in its April 5 Analyst Day that Cox-2 sales would accelerate in late 2005," says Merrill Lynch analyst David Risinger, who rates the stock neutral, in a bit of a client-note understatement.

The super aspirins aren't the only example of bad timing at Pfizer's offices this week. The company's cost-cutting frenzy comes less than a week after

The New York Times

pointed out that Chairman Hank McKinnell stood to reap some $80 million worth of supplemental benefits when he retires sometime down the road.

Of course, unlike the workers looking at "some modest reduction" in total employment, as Pfizer put it, McKinnell isn't exactly hurting to start with. He made $17 million last year, according to Yahoo! Finance. A Pfizer rep didn't immediately return a call seeking comment.

But going by those numbers, it seems like there's at least one guy at Pfizer who should be able to tolerate this week's pain.

Eliot Net
Crime-busting AG's AIG online campaign ad

4. Googling Eliot

We'll admit that the twists and turns in the AIG case have left us befuddled at times.

Reinsurance treaties. Offshore affiliates. Cross-ownership arrangements. Who can keep it all straight?

It's tough. In fact, judging by an advertising mishap this week, even Eliot Spitzer's office is having its problems.

Of course, Spitzer is New York state's crusading attorney general. He and other authorities have been investigating AIG's business and accounting practices for some time. Spitzer is also running for governor next year.

But this week, it seems like someone's in Spitzer's campaign office got his signals crossed, and confused Eliot the state prosecutor with Eliot the political candidate.

On Wednesday,

Google

(GOOG) - Get Report

users who typed AIG into the search engine were treated to a sponsored ad reading "Spitzer for NY Governor" and directing them to

www.spitzer2006.com.

Now, everyone understands that the attorney general has political aspirations. But isn't it going a little overboard to take out an ad capitalizing on a sensitive investigation?

To its credit, Spitzer's office admits it has egg on its face. Spokesman Darren Dopp says the ad, which ran on Google only on Wednesday, "wasn't appropriate." He emphasizes that a low-level campaign staffer made a mistake in adding AIG to some campaign advertising keywords. Dopp says Spitzer himself immediately insisted the ad be removed.

The attorney general's office learned of the ad after a reporter called for comment, Dopp notes.

"Mr. Spitzer was like, huh?" Dopp says.

After spending hours stumbling over the details of AIG's dealings with outfits like Union Excess, we couldn't have said it better.

5. Cherry Bomb?

Spring is here, and the latest book-cooking talk at

Fannie Mae

(FNM)

is right in step with the season.

This week the Washington-based mortgage giant's chief regulator, Armando Falcon Jr.,

set plans to step down next month. But Falcon, who led the regulatory push that finally resulted last year in Fannie agreeing to shake up management and reform its culture, won't be leaving quietly.

A day after he sent his resignation letter to President Bush, Falcon testified before a House panel that Fannie appears to have broken accounting rules with its handling of some mortgage-backed securities.

Falcon, chief of the Office of Federal Housing Enterprise Oversight, said Fannie kept the best securities and sold the weaker-performing ones to investors in a practice known internally as "keep the best; sell the rest." Falcon said the practice appears to contradict Fannie's previous statements that it didn't engage in an investor-damaging practice called cherry-picking.

Fannie didn't comment. But the nature lovers at the Five Dumbest Things research lab couldn't help but notice that the accusation comes just as Washington swings into

cherry blossom season.

Yes, all sorts of wild things are blooming at Fannie about now.

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