AIG's Greenberg Still Unrepentant
Former AIG chairman Maurice "Hank" Greenberg paid a visit to the Federalist Society at the right-wing legal group's annual Washington meeting Friday. And the man who spent 27 years at the helm of the insurance giant that nearly brought down the entire American financial system was as unrepentant as ever about any role he might have played in the crisis. On hand (er, phone, actually) as part of a panel discussion on the Wall Street bailout, Greenberg devoted the bulk of his time painting AIG as a victim of government incompetence and favoritism.
By his telling, the government has given AIG pretty shoddy treatment since it first loaned the company $85 billion and took an 80 percent share. Observing that the government doesn't do a very good job of running companies—witness the Post Office—he said he was "puzzled" by how the bailout terms became so punitive and why the government wasn't more interested in helping the company get back on its feet. He wondered how federal officials decided to stick it to AIG and not other companies that then got propped up with money funneled through AIG. "Why is one institution going to be liquidated while others have been guaranteed?" he asked.
To that end, Greenberg advocated the creation of a commission made up of "prominent Americans" (i.e., not members of Congress) who would have subpoena authority and get to the bottom of some of these lingering questions. Greenberg insisted that when AIG was bailed out, the "insurance entities of AIG were very solid," a "national asset." (No matter that back in March, AIG itself told the Treasury Department that it needed even more federal funds because of problems with its life insurance sector, not because of the disasterous credit default swaps coming out of its now-infamous financial products division.) In Greenberg's view, if the government had simply provided guarantees for all those credit default swaps, it would have restored liquidity and there would have been no need to take over the company.
But if the industry lion was hoping for a sympathetic ear from the conservative lawyers assembled in the Mayflower Hotel ballroom, Greenberg must have been sorely disappointed. During the question period, a law student from Washington and Lee got up and demanded to know why AIG deserved any government aid given the way it had behaved and allegations that it had illegally tried to squash competitors. Greenberg said AIG had never been found guilty of anti-trust violations but he conceded that "I happen to agree that bankruptcy might have been a better outcome for everyone." Mostly, though, he stuck to his talking points about AIG as a victim of government caprice and his deisre to learn just who picked the winners and losers in the bailout.
Greenberg has good reason to want the government to work harder to restore AIG to its former greatness rather than sell off its assets. When the company collapsed, he lost the bulk of his vast fortune along with it. Even though he left in 2005, under a cloud of fraud charges, Greenberg was still AIG's largest shareholder when it went down. Presumably he still owns a few of those almost-worthless shares in the company. Still, his Wall Street mindset still prevails. In response to a lawyer's question about whether executive pay limits might be a good idea, Greeberg thought it would be impossible to run a successful company paying people only a measly $200,000 a year, as has been proposed by the Obama administration's "pay czar."
At the end, I asked Greenberg whether he had any remorse or regret about the role that his company played in wrecking the economy. "No," he declared. "I think we had a very good record." And when I asked whether in retrospect there was anything he might have done differently that might have prevented the current financial disaster, Greenberg stuck with his usual defense: It didn't happen on his watch. He claimed that the riskiest activity at AIG took place in the seven months after he departed. "I can't be responsible for what happened after I left," he said.