Lawmaker Asks Hank Greenberg how to Revive AIG. Huh?

Last Updated Sep 21, 2009 4:55 PM EDT

A key Washington lawmaker examining how to bring AIG back from the dead is huddling with none other than former company supremo Hank Greenberg about how to revive the insurance company. Doesn't that amount to a wee conflict of interest? Besides, it's like asking Nero for advice on how to fire-proof Rome.

Set aside the question of what responsibility Greenberg bears for propelling AIG over the edge, ultimately requiring U.S. taxpayers to front the company $182 billion to keep it from going splat. Forget also that he left AIG four years ago after it emerged that the company's books were as cooked as an overdone rump roast.

The bigger issue is that Greenberg, as CEO of investment firm C.V. Starr, is AIG's largest individual shareholder. That might begin to explain his proposed solution for AIG. The plan reportedly involves slashing the interest rate on its government loans and giving the company more time to repay its debts.

"I've directed the committee staff to take a look at Hank Greenberg's proposal to restructure the debt, because I think it is something to which we should give serious consideration," Rep. Edolphus Towns, head of the House Oversight and Government Reform Committee, told Bloomberg by emal.
Uh, huh. Of course, if you're willing to give "serious consideration" to further propping up AIG, then seeking advice from Greenberg may not seem so loony. Interestingly, Towns is also the congressman who's holding Bank of America's feet to the fire over its acquisition of Merrill Lynch. Strange times.

My colleague Ed Leefeldt has a longer analysis of what might be going on.

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    Alain Sherter covers business and economic affairs for CBSNews.com.