Why AIG Stumbled, And Taxpayers Now Own It

Steve Kroft Reports On The Troubled Insurance Giant, And Talks To Its New CEO

(CBS)  Since Liddy took over, he says the troubled, volatile entity has disposed of half of its complex derivative investments, but another 27,000 deals valued at $1.5 trillion are still on the books.

"We spoke to someone who's intimately familiar with AIG Financial Products. And he told us that out of the 10 or 20 people who were really involved in the decision-making process, only two have left the company. That everybody else is still there. Is that true?" Kroft asked Liddy.

"Steve, we've had some resignations," Liddy replied. "We've had some people who have said 'I'm going to resign, I'm not going to give you my resignation now, because I want to do this professionally and I want to help you.'"

Asked if it is true that only two people have left, Liddy said, "To the extent there are people who traded credit default swaps, some of them may still be there, because we're asking them to un-trade them But the people who designed it, who built those models, who signed us up for that business, they are gone."

"Retired, comfortably retired," Kroft remarked.

"Retired, left, went and did other things," Liddy said.

60 Minutes asked to speak with some of the employees of AIG FP and visit their offices in Wilton, Conn.

Liddy declined, but provided us with a video of the operation. He said people there were still traumatized from the threats and harassment leveled against them during the recent bonus controversy, and no one wanted to talk to us.

"Busloads of people wound up on their lawns, taking pictures, picketing in front of their houses. Just not a good idea for us to get back into that," Liddy explained.

Liddy believes the public anger directed against the company and its employees is misguided and counterproductive, making it more difficult to hold onto the people it needs to keep the company going, and undermining the value of its most successful and profitable assets which he is trying to sell.

Just this week, the company unloaded its Tokyo office building for $1.2 billon. The AIG brand - once a huge asset - is quickly vanishing. Even the iconic Manhattan headquarters is up for sale.

"So you are, in effect, the liquidator?" Kroft asked.

"Well, I don't think it will be called AIG, but there will be pieces of this institution left. But that's the only choice we have. That's the only way we can pay back the government," Liddy said.

Asked if all of the government money will be paid back, Liddy said, "That's what we're committed to doing."

"He's got a very tough job ahead of him," Richard Ferlauto told Kroft. "I don't envy him at all."

"You seem to be saying that AIG is still not out of the woods," Kroft remarked.

"If the economy deteriorates anymore, I think there are more problems out there," Ferlauto said.

"We're not an island," Liddy told Kroft. "We're very much dependent upon what happens in the overall economy and the overall financial marketplace. But we have a plan that we'll execute over the next couple of years that we think has an excellent chance of repaying the federal government."

[Riskman]

Mr. Liddy was not all that honest with you in your interview. Mr. liddy was proud to say that he only earns $1.00 a year. What he didn?t tell you is that his benefits far exceed that of any normal employee. According to the company?s 10K filing with the SEC and the national underwriter, May 11, 2009 edition Mr. Liddy also received:
$47,578 for commuting from Chicago to NY
$38,368 for a NY apartment
$31,348 for car service
$180,341 toward his taxes
$162,686 paid to his attorneys for developing his compensation structure.
The article states another employee who worked on a ?voluntary Basis? actually received over $900,000 in compensation in 2009. This information shows that the people who received bonuses were not the only employees over compensated. As someone once told me,? the fish stinks from the head?.

[Azsandman]

Ok we own it right? How do we get rid of it then? No one asked me if I wanted to own a pink elephant. SO, I want to cash in my share. Please make the check payable to "BEARER" Where is the "cash out line?"
There is lesson from the past Mr. Obama needs to learn. When the Titanic was sinking the Captain ordered,"abandon ship," not, "we can bail this out if we all use our shoes as buckets."

[number1GI]

Now that I am one of the new share holders I want to vote myself a raise of Oh ! say ten billion dollars and some pillow cases to put it in and a jet plane to escape in. ROTFLMAO

[brianbwb-2009]

"AIG is struggling because of Obamas liberal policies forced them into this position." Posted by mrs_trepidatious

Get a grip, AIG was in the hole long before Obama became president.

Reading is fundamental, the first paragraph of the article states,

"...none has proved more costly or contentious than the rescue of American International Group (AIG). Its reckless bets on subprime mortgages threatened to bring down Wall Street and the world economy last fall until the U.S Treasury and the Federal Reserve stepped in to save it."

Now who was president last fall? When did AIG begin the practices outlined in the first paragraph? How much are you being paid to look like a limbaugh Bushbot?

[tedryfiak]

If less than a quarter of that bailout money was lent directly to US manufacturers to hire workers and produce useful goods, the economy would have turned around instantly. People that have jobs spend money. Financial institutions are only good at hoarding money unless they find someone to lend it to that doesn't really need it.
If our politicians and financial experts figure out that jobs for average citizens have to come first, there might be some hope for us but don't hold your breath.

[lovegetpeace]

I can't help but roll my eyes when someone suggests that we might get repaid on this deal..... It's not going to happen.. It was never intended... by anyone... for there to be a repayment... We were ripped off..... We'll STAY ripped off.....and I think we're wasting our time even discussing it. This whole thing is positive proof that the people cannot control the government, once the crooks in government decide to do something.......
Posted by WiseAsOwl at 7:09 AM : May 18, 2009

Can you train me how to predict the future? I want to make trillions in Walls Street.

[WiseAsOwl]

I can't help but roll my eyes when someone suggests that we might get repaid on this deal..... It's not going to happen.. It was never intended... by anyone... for there to be a repayment... We were ripped off..... We'll STAY ripped off.....and I think we're wasting our time even discussing it. This whole thing is positive proof that the people cannot control the government, once the crooks in government decide to do something.......

[walt1944]

I agree with Liddy when he says that only a handful of people brought the company down, but it doesn't mean he isn't in some way responsible for it!

I have worked in companies which hired upper executives who worked to satisfy their own egos rather than be concerned with making sure the company survives. That includes making bad decisions, getting the company involved in risky ventures, moving away from the company"s "core" to make a quick buck and not worry about any "flashback"!

And when that "flashback" happens, these guys who get the company in trouble end up walking away with a bag of money, while the top executives and the average employee at the company are holding the bag of "poop"!

This doesn't absolve the top management from blame. Top management should have been monitoring these greedy, egotistical corporate executives and should have acted on them when it became apparent that what these corporate "hotshots" were doing could really harm the company. Instead, top management gave them freedom to get involved in any outhouse they wanted and never said a word to reprimand them!

The one's who really suffer are the average worker at the company who has put his/her entire life into building the product or pushing the pencil, and ends up losing thir jobs because of it even though they had absolutely nothing to do with it!

As George W. Bush would say, THAT'S BUSINESS!!!!

HAIL OBAMA!!!!

[ramos1129]

Kudos to Libby. He has taken on a very hard job for the taxpayers at $1 per year.

AIG has been tagged way too big for us to allow it to fail. Good enough. But, AIG itself is akin to a holding company composed of about six different companies. Except for AIG Financial and possibly one more, all of the other four are financial solvent and perhaps even profitable.The two that are not are dragging AIG into insolvency.

Since we own AIG, we should immediately break AIG into a number of small companies. These could start repaying what AIG owes the government. The bad two firms could be quarantined and then either sold or liquidated. Problem solved.

[inachu1]

Now that taxpayers own it then..... shouldn't the service be cheaper?