CEO Liddy: No More Bailouts Needed for AIG
Liddy is confident of company's plan, but says success depends on global market.
May 13, 2009— -- "We will do everything we can to not require additional federal money," the CEO of troubled insurance giant AIG told a congressional panel today.
Totaling up the $170 billion AIG has received from Federal Reserve borrowings and money from the Troubled Assets Relief Program, CEO Ed Liddy told the House Oversight and Government Reform Committee that the company believes that "in today's marketplace that that is sufficient and we will not need additional money."
But the declaration came with a big if: "That answer is very dependent upon what happens to the overall economic conditions and financial market place around the globe."
Liddy assured the lawmakers that "we're doing everything we can" and that AIG believes it has "a terrific plan, a viable plan that's not as dependent on the capital markets as other plans might have been. But asset values have to stay strong. There has to be a capital market that enables us to take businesses public."
"I think that that will happen, but I can't give you a guarantee on that. I can't control what happens in the worldwide financial market place."
Skeptical lawmakers pressed for more details of the plan, called Project Destiny. The panel's chairman, Rep. Edolphus Towns, D-N.Y., said that Congress needs to fully understand the "long-range plan" for AIG.
Liddy cautioned that the details of the plan are sensitive and could destroy AIG's ability to remain competitive if released, but he did agree to release portions of the plan to the lawmakers.
Liddy's optimistic forecast is just one of four areas in which he touted "substantial progress" made as part of the company's ongoing restructuring.
"We have reduced, but not yet eliminated, the systemic risk that AIG presents to the global system," he said in his opening remarks.
Noting various restructuring moves within the company, and the "significant progress" in winding down the complex derivatives portfolio of the controversial AIG financial products division, which almost singlehandedly drove the company into the ground with risky credit-default swaps. The exposure has now dropped from $2.7 trillion to $1.5 trillion, Liddy said.
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