"I think you had a significant role to play, particularly with regards to the problems with the Financial Products division, which has largely been blamed for the downfall of AIG," said Rep. Elijah Cummings, D-MD.
Greenberg said that after he left, the unit had engaged in risky bets even after losing its triple-A rating, but Cummings quickly noted that AIG lost that rating the day after Greenberg stepped down in 2005.
"They went off on a tangent," Greenberg said of AIGFP. "They wrote in nine months more than double the amount of business that we had put on financial products than we did in the past seven years and of a lower quality. All of that's been verified. So clearly if you don't have controls and if you don't have management oversight, things could go wrong and they did."
"What you fail to mention is that a good portion of those risky bets occurred while you were still at the helm of AIG," responded Cummings.
Across the aisle, Issa agreed with Cummings' criticisms.
"It is clear that the crumbling of AIG began on your watch, that there were systemic problems that had occurred," Issa told Greenberg.
Issa also raised questions about Greenberg's credibility, noting that he is "a recurring figure" in criminal and civil investigations by the Department of Justice and the Securities & Exchange Commission. The hearing is the first in a series that the committee will hold on the failure of AIG. Later this month, current CEO Ed Liddy will testify before the panel. Today Greenberg, who ran AIG for 35 years and remains the company's largest shareholder, said Liddy is not the right man for the job. "Liddy's a nice person, I have nothing against him as an individual," Greenberg said. "But he ran a domestic insurance company. He's a good man, I have no problem with that, but he doesn't have the background for the job that needs to be done." Last month, Liddy came before a separate House panel and told Congress that AIG's "overall structure is too complex to be managed as one entity", a claim disputed by Greenberg today. "AIG's history demonstrates that its businesses can be highly successful if properly managed, and managing AIG properly is the only way to ensure that the American taxpayer will be repaid," he said.
Former AIG CEO Maurice "Hank" Greenberg, who led the insurance giant for nearly four decades, told Congress today that the federal bailout of the insurance giant has "failed" and that American taxpayers cannot expect to get their $180 billion investment back.
Greenberg, who was forced out of AIG in 2005, testified today before a House Oversight Committee about the federal government's efforts to prevent the company he helped build from collapsing under a mountain of bad debt.
Greenberg argued that the government's plan to liquidate AIG has failed and also diminished its value for taxpayers, who now own 80 percent of the company after it received more than $180 billion in bailout cash.
"That plan has failed," he said. "A successful liquidation is impossible in the present economic climate since buyers for AIG assets at fair prices simply do not exist at this time. Fire-sale prices will bring taxpayers, who now own almost 80 percent of AIG, only pennies on the dollar for their investment in AIG."