The government-installed head of AIG told Congress Wednesday the insurance giant is making progress toward repaying U.S. taxpayers by selling many of its foreign assets, but lawmakers questioned whether the plan makes sense and demanded details.
American International Group aig Chief Executive Edward Liddy said the company has reduced, but not eliminated, the risk its failure could pose to the global economy despite getting more than $180 billion in federal bailout aid.
"The assurance I can give you is we will do everything we can to not require more federal money" but that will hinge on how long the worldwide recession drags on and the condition of the financial markets, Liddy told the House Oversight and Government Reform Committee.
With the government owning a nearly 80% stake in AIG, lawmakers pushed Liddy on themes they said have angered Main Street Americans: company secrecy, the payment of hundreds of millions in bonuses to employees and financial performance.
"What is the plan to repay the American people and does it have a realistic chance of working?" asked committee chairman Rep. Edolphus Towns, D-N.Y. The excesses continue with AIG paying public relations executives up to $600 an hour in taxpayer money, he said.
"We think that the American taxpayer will be fully repaid" in three to five years under the company's plan, Liddy said.
Liddy agreed to provide portions of AIG's "Project Destiny" restructuring plan to the committee, but said details are sensitive and could hurt the company's ability to sell assets while unfairly helping its international competitors: ACE, Zurich Financial Services Group and Axa.
Jill Considine, one of three trustees charged with overseeing the government's interest in AIG, called the company plan "workable."
The trustees have asked Liddy to make a thorough review of AIG's compensation programs and to develop a new one. They also are seeking new board members for the company, who could be elected at a shareholders' meeting next month.
"We share the concerns about the payment of large bonuses at a time when AIG was failing and being rescued by the taxpayers," Considine said.
Considine and the other trustees —Chester Feldberg and Douglas Foshee — appeared separately from Liddy but also endured some harsh questioning from lawmakers.
"It's an inside deal," Rep. Marcy Kaptur, D-Ohio, told them angrily, citing their former and current ties to large financial institutions.
Towns asked whether it made sense to sell off AIG's assets in a bear market where prices are depressed.
AIG on Monday announced plans to sell its Japanese headquarters to Nippon Life Insurance for $1.2 billion in cash. The transaction is expected to close in the second quarter.
Liddy said AIG doesn't intend to sell its assets at "fire-sale prices." AIG plans to retain its U.S. property-casualty and foreign general insurance businesses, and a stake in its foreign life insurance operations.
It was the second grilling before Congress in less than two months for Liddy, who was brought out of retirement by the Bush administration for a $1 annual salary to lead the hobbled insurance giant after it nearly collapsed at the height of the financial crisis last fall. Liddy is the former chairman and CEO of Allstate.