AIG became one in a string of corporate calamities and a touchstone for public outrage. The huge volume of credit default swaps — a form of insurance against bond defaults — sold by AIG, coupled with rising levels of defaulted mortgage and other debt, threatened the company's existence and prompted the government to step in.
Government aid to AIG now totals $182.5 billion. Liddy pegged the company's current value at around $5 billion. AIG shares, which traded as high as around $70 in mid-2007, fell 21 cents, or 11.6%, to $1.60 Wednesday afternoon.
Liddy said the company has reduced its exposure to credit default swaps to $1.5 trillion, compared with the original $2.7 trillion, trimming its risk of failure.
Noting the company's fourth-quarter loss of $61.7 billion — the biggest quarterly loss in U.S. corporate history, Rep. William Lacy Clay, D-Mo., said "it appears that taxpayers are merely propping AIG up."
Liddy said the company has made progress. In the January-March quarter, the loss narrowed to $4.3 billion, compared with $7.6 billion a year earlier.
The $450 million in bonuses AIG paid to employees, including to traders in the financial products unit that brought it to the brink of collapse, fueled public and congressional outrage. The Democratic-led House approved a bill in March that would slap punishing taxes on big bonuses at AIG and other companies bailed out by taxpayers. The Senate didn't act on the plan, however.