Greenberg Calls AIG Bailout A "Failure"

By: Dan Farber
Topics: AIG

(CBS)

Former AIG CEO Maurice "Hank" Greenberg told a House Oversight and Government Reform Committee Thursday that the government bailout of AIG is a failure.

In a prepared statement, Greenberg said:

"That plan has failed. A successful liquidation is impossible in the present economic climate since buyers for AIG assets at fair prices simply do not exist at this time. Fire-sale prices will bring taxpayers, who now own almost 80 percent of AIG, only pennies on the dollar for their investment in AIG.

"Since the day the treasury announced its plan to liquidate AIG, value has been destroyed because AIG's people and their relationships — AIG's business — are leaving. The evidence is overwhelming and indisputable that the American taxpayer is an investor in a steadily diminishing asset."

Greenberg came to Congress with a 10-point plan to fix and rebuild AIG.
He advocated reducing government ownership in AIG, splitting off the Financial Products division and asking the banks who received billions in payments from AIG, due to the bad bets of the Financial Products division, to return some of the money in exchange for equity in the company.

Greenberg also reiterated his denial for any wrongdoing on his part in the financial fiasco. He blamed the management who succeeded him after his resignation, as the result of fraud charges, from the company on March 14, 2005. He said the Financial Product group went off on a "tangent," and in nine months booked more than double the amount of contracts for financial products, of lower quality, than it had in the past seven years.

"You would have thought that somebody should have called a halt until it regained its AAA rating and would slow down materially or discontinue," he said. The lowering of AIG's credit rating triggered the payouts to financial institutions that brought down the company.

"AIG did not have a solvency problem, it has a liquidity problem," Greenberg added.

AIG's current management issued a statement contesting the 83-year-old Greenberg's claim of innocence.

"Given that Hank Greenberg led AIG into the credit default swap business, has repeatedly refused to testify under oath about a transaction he initiated when he was still AIG's CEO, and is being investigated by the SEC and the Justice Department, we don't understand how he can be viewed as having any credibility on any AIG issue."

Daniel Farber is Editor-in-Chief of CBSNews.com

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by clcmm36 April 4, 2009 12:59 PM EDT: Prompt Corrective Action Law, passed after the savings and loan crisis, which mandates that severely undercapitalized banks be promptly put into receivership is a mandate which the Bush Administration did not enforce and the Obama Administration is not enforcing. Bailouts should not have happened last year or this year!
Claudia Independent; Reply to this comment


by sjc_1 April 3, 2009 12:23 PM EDT: Greenberg is a sleezy little weasel. He wants to make it look like he walked on water and everyone else was an idiot. The AIG money was to pay the banks to cover the bad CDS bets. It was just a clearing house.; Reply to this comment


by texasbeta April 2, 2009 9:56 PM EDT: Failure!!!! That's good because now they have something in common with the Obama administration.
Posted by enjoylife63

You are a talking monkey...do your knuckles drag when you walk? I was unaware that the history of the United States began on Jan 2009. Idiot; Reply to this comment


by Kateg1149 April 2, 2009 9:38 PM EDT: Why does the main stream media insist on quoting or interviewing the most discredited economic and political figures in our society like Greenburg, or Dick Cheney, or Karl Rove? No one cares what these crooks have to say - they all belong in jail.; Reply to this comment


by cbsblogger April 2, 2009 7:14 PM EDT: Maurice Greenberg and his son Jeffrey were forced to step down as CEOs (one of AIG and the other of Marsh McLennon) and both accused of accounting irregularities (i.e scammers). It must run in the family or perhaps in the genes. Both were part of the problem, not at all part of the solution. Taxpayers are part of the solution but will they share in the spoils?; Reply to this comment


by esaun211 April 2, 2009 4:39 PM EDT: not tryn to sound drastic but 4 how long are we the public suppose to finance the luxurious lifestyles of a select few seems no matta the pres or his color the same agenda persist how long is greenspan going to be relevant boma for the bankers like most pres (bush- halliburton kbr; clinton- tyson walmart; obama-wall street banking) hmm who reallly 4 the people; Reply to this comment


by sjc_1 April 2, 2009 4:23 PM EDT: The time line I saw had AIG in CDS around 2003, well before this buy left the company. Claiming he knew nothing about it for more than 2 years would stretch credibility more than a bit.; Reply to this comment


by esaun211 April 2, 2009 4:03 PM EDT: just dont get amer corporations rape the public with no consequences affecting 100s of millions of lives yet if i sell 1 to 2 grams of controlled substances i face decades behind bars forget war on drugs what about war on corps; american citizens if had any sense would imply same terroristic tactics against corps with same vengeance saw in mid east we should fight against credit card companies mortgages and other outlandish debt inslavers; public cant wait on bailouts and other eco relief for real revolution starts within the people we need to act b4 it is to late; Reply to this comment


by straightmate April 2, 2009 3:44 PM EDT: Somebody get the logchain, I'll get the truck.; Reply to this comment


by bajajohn1 April 2, 2009 3:41 PM EDT: Greenberg is as dishonest as the day is long. He is a fellow, who with his sons conspired to fix insurance pricing, in collusion with brokers from other companies. This guy started the credit-default swaps and now he is advising Republicans in Congress. Smells like a bunch of pig manure emanating an unbearable stench. They need to take Greenburg and make him walk across the Atlantic. For some you who do not understand what a credit-default swap is, go look it up on wikepedia. And the worst part of this nighmare on Pine Street is that the Bush bunch, even after being warned, sat on their arses and did nothing, nada, zilch. Make all them walk across the Atlantic.; Reply to this comment