Ex-Allstate CEO called to led AIG out of crisis

SPRINGFIELD - A year ago, Edward Liddy was getting out-fished by a friend's wife in Canada.

The former Allstate Corp. CEO and chairman was on a fishing trip with Ron Gidwitz and wife Christina, who hauled in the biggest catch, Gidwitz recalled.

Fast-forward a year and things have changed dramatically.

"He's got the bigger fish now," said Gidwitz, a former Chicago business executive and influential political fundraiser.

Indeed, Liddy finds himself hooked into a whopper. On Wednesday he was picked to take charge of insurance and financial giant American International Group Inc., which has been kept alive by a government loan that could reach $85 billion.

Helping ensure the loan went through was U.S. Treasury Sec. Henry Paulson, a Barrington Hills native with a long business history in Chicagoland.

Liddy and Paulson find themselves in the spotlight, trying to fix the financial meltdown that again sent shock waves through the nation's economy. Those who know the two say they are incredibly talented and intelligent, but face a daunting task.

Liddy starred at Sears, helping oversee the breakup of company assets that spun off to become Allstate, Dean Witter and others. He then went on to run Allstate and may best be remembered to those outside the financial community as the man who put Allstate's name on the Rosemont Horizon.

"He touches something, you can take it to the bank," said Gidwitz.

Paulson, who grew up in Barrington Hills, joined Goldman Sachs in 1974 and went on to run the firm. Liddy joined Goldman Sachs board in 2003.

President Bush picked Paulson for treasury secretary two years ago.

It was Paulson's treasury department that last week seized floundering Freddie Mac and Fannie Mae, and then briefed congressional leaders on the need to keep AIG afloat. According to Bloomberg News, it was Paulson who decided to oust AIG CEO Robert Willumstad.

"This is one of the most, I would say, sensitive and dangerous times in the history of American finance," said R. Eden Martin, president of the Commercial Club of Chicago, who knows both men. "Our secretary of the treasury is as good as anyone at trying to deal with it."

"We're lucky to have him there," Martin said. "But the story isn't over."