Taxpayers got a raw deal, former AIG chief contends

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

After 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 largest bailout of the financial crisis.

In his first testimony since the government stepped in with the first of four bailouts for AIG, Greenberg told the House Oversight and Government Reform Committee 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 percent stake “in a steadily diminishing asset” and no good exit strategy, Greenberg said.

The 83-year-old said he never would have made the disastrous decision to sell 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.

Greenberg criticized their handling of the financial products division. 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. The swaps are commonly used contracts to insure against the default of financial instruments such as bonds and corporate debt. But they also are bought and sold as bets against bond defaults.