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Former Lehman Honcho: Out of the Frying Pan, Into the AIG Fire

American International Group no longer has a deep bench of executives to draw on when someone calls it quits. The proof is that AIG didn't promote from within when General Counsel Anastasia Kelly threw a fit about her salary and left.

AIG also has a bad reputation and not much leverage when it comes to bringing new blood into the company. And the proof is that it is bringing on board former Lehman Brothers Vice Chairman Thomas Russo to replace Kelly.

In case you've forgotten: the fall of Lehman Brothers in September 2008, which also overindulged in credit default swaps and was actually, unlike AIG, allowed to go bankrupt, was the first act in the AIG tragedy. There are those who still believe that had Lehman been propped up, the rest of the dominoes wouldn't have fallen.

Be that as it may, it's clear that Russo was at the top of the Lehman pyramid when it crumbled. His Lehman resume notes that as its "chief legal officer he is responsible for the firm's corporate advisory division, which includes legal, compliance, corporate audit ... and transaction management. In addition he is chairman of the firm's new products committee and operating exposures committee."

Simply put, Russo was responsible for a broad swath of the firm's business, including the areas that got into trouble. He was also a close aide to Lehman Chairman Richard Fuld, who, at one time was the most hated man in America and was depicted on the cover of New York magazine with horns.

All this is baggage that Russo carries with him into his new job, and he doesn't even know yet how much he'll be paid. That is still to be negotiated with pay czar Ken Feinberg. Chances are it will be substantial.

But look on the bright side. At least Russo knows what he's up against, having been through it already at Lehman. It's also clear that he's very bright. As Lehman sank, he stepped right into the lifeboat of Patton Boggs, one of the nation's top law firms. And, lest we forget, at Lehman Russo oversaw the biggest bankruptcy in U.S. history. If he has to do it again he now has the experience.