AIG Rescue Has Failed, Greenberg Says
The rescue of American International Group Inc. by the U.S. government has 'failed' and should be replaced by a plan to restructure the once-vaunted insurance company that has taken on $170 billion in government aid, the company's former chairman and chief executive said Thursday.
Maurice 'Hank' Greenberg, who headed the company for 38 years until his departure under pressure in 2005, said taxpayers are losing money on their investment. Instead of liquidating the company and selling off its assets, the government should reduce its investment and replace it with government guarantees, he said in prepared remarks to a U.S. House committee. The management and board of directors also should be replaced, Mr. Greenberg said.
'My approach focuses on reconstructing and sustaining AIG so that it will in the future be a healthy and vibrant company once again,' Mr. Greenberg said in his testimony before the House Oversight and Government Reform committee. 'Let me be clear: AIG's business model did not fail -- its management did.'
Thursday's testimony marked Mr. Greenberg's first public appearance under oath since the government's initial rescue of AIG in September.
Mr. Greenberg said the government should reduce its stake in AIG to 15% from 80% in order to attract private capital. Additionally, Mr. Greenberg said billions in government funds shouldn't have been paid to AIG's counterparties; giving other financial firms guarantees would have been a better option.
'These cash payments to [credit-default-swap] counterparties should never have occurred,' Mr. Greenberg said. 'It would have been more beneficial for the American taxpayer if the federal government had walled off AIG Financial Products . . . and provided guarantees to AIGFP's counterparties rather than putting up billions of dollars in cash collateral to those counterparties.' |
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