Greenberg Says AIG Bailout Was Avoidable

"Since the day the treasury announced its plan to liquidate AIG, value has been destroyed because AIG's people and their relationships -- AIG's business -- are leaving," he said. "The evidence is overwhelming and indisputable that the American taxpayer is an investor in a steadily diminishing asset."

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.

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."

"AIG is not too big to be managed. It is too big to be managed poorly," Greenberg argued today. He said that the company -- and taxpayers' investment -- can still be salvaged.

"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.

To save AIG and help taxpayers recoup their money, Greenberg lays out a 10-point plan to replace the government's "systematic dismantling."

"The goal of government should not be to liquidate large companies that have demonstrated that they can succeed if properly managed. It should be to restore them so that they can be employers and taxpayers," he said. "We have the opportunity to follow a different course that will both preserve tens of thousands of American jobs and better ensure that U.S. taxpayers are repaid. The way to do this is to abandon the liquidation approach and focus instead on rebuilding AIG so that it is better positioned to pay back the taxpayer."

Greenberg argued for slimming down the government's stake in AIG and pressuring trading partners that got huge payments as a result of the insurer's bailout to funnel some of that money back into AIG as an investment. He also suggested separating AIG from the troubled AIGFP unit, whose trading in controversial credit default swaps plunged the company into crisis.

Greenburg also gave a vehement defense of his role in AIG and said his policies are not to blame for the company's failure.

"AIG's business model did not fail. Its management did," Greenberg said. "AIG's business model has a long track record of success over many decades. AIG can recover from its immediate crisis, continue to be an employer of tens of thousands of hardworking Americans and repay the assistance it has received from the American taxpayer, but only if both the government and AIG's management change their approach to dealing with its future."

In introducing Greenburg, committee chairman Rep. Ed Towns, D-N.Y., said, "Today we will hear testimony from the one man who knows more about AIG than anyone in the world."

"We need to understand what went wrong, so that we can figure out how to prevent similar disasters in the future," Towns said.

Forced to step down in 2005 in the midst of a fraud investigation run by then-New York Attorney General Eliot Spitzer, Greenberg has said AIG's collapse cost him his entire net worth.

  • 1
  • |
  • 2
  • |
  • 3
  • |
  • 4
Join the Discussion
blog comments powered by Disqus
You Might Also Like...