Former AIG CEO criticizes successors, bailout

WASHINGTON — The man who built insurance giant American International Group Inc. from a start-up to a global behemoth said he didn’t mismanage the company -- but the government did.

Following weeks of public and congressional outrage over the largest corporate failure in U.S. history, Maurice “Hank” Greenberg, AIG’s chief executive until March 2005, said taxpayers got a raw deal in the ensuing bailout.

In his first testimony since the government stepped in with four bailouts for AIG, Greenberg told the House Oversight and Government Reform Committee on Thursday that his leadership team had “nothing to do” with failures that so far have cost taxpayers more than $182 billion.

But he spread blame generously across virtually every other party involved in the company and its rescue -- including subsequent management, federal regulators and ratings agencies.

An AIG spokesman disputed Greenberg’s claims, and lawmakers questioned the truthfulness of his testimony.

Since taking over the company, the government has left taxpayers with a nearly 80% stake “in a steadily diminishing asset” and no good exit strategy, Greenberg said.

The 83-year-old said he never would have sold hundreds of billions of dollars in guarantees for corporate and consumer debt.

“When I left the company, it was a healthy company,” Greenberg said, citing its strong earnings and share price at the time. He did not discuss liabilities AIG was accumulating on its balance sheet through derivatives and a securities lending business.

Greenberg blamed his successors for all of New York City-based AIG’s problems. He said they recklessly abandoned “comprehensive and conservative” risk management procedures that he and his executive team employed.

“AIG’s business model did not fail; its management did,” Greenberg said. He went on to criticize their handling of the Financial Products division, which he said “functioned quite well” under his leadership.

That division wrote the notorious credit-default swaps that have forced the company to pay more than $50 billion to U.S. and foreign banks. Greenberg said the payments never should have been made.

California Rep. Darrell Issa, the panel’s senior Republican, said he doubted Greenberg’s truthfulness given his involvement in many lawsuits related to AIG’s failure. Rep. Elijah Cummings (D-Md.) rejected Greenberg’s finger-pointing.

“I’m convinced that the systemic problems at AIG go far deeper than mistakes made in the four years since you left the company,” Cummings said.