Insurance Industry News from ProgramBusiness.comGreenberg's Perspective
(As originally reported by NU Online News Service)
Maurice “Hank” Greenberg slammed the federal government for taking nearly 80 percent ownership of AIG as part of its financing deal to bail out the firm he led for many years, saying the result was an unnecessary nationalization of the company.
In a follow-up interview on the “Charlie Rose Show,” the day after the Federal Reserve provided American International Group with an $85 billion bridge loan in return for a 79.9 percent stake in the company, Mr. Greenberg said the loan itself was not a problem, but the equity takeover was not acceptable.
“[I’m] not very happy,” Mr. Greenberg, AIG’s former chairman and chief executive, told Mr. Rose. “AIG didn’t need a bailout. A bailout infers you are insolvent, or you need a capital injection. AIG needed a line of credit, a temporary infusion of cash. It did not need capital. What the government did was make $85 billion available, to take down as needed, at roughly 11 percent interest, which is okay. In addition, [the Fed took] 79.9 percent of the equity of the company, and that essentially nationalizes the company.”
AIG has two years to pay the loan back, Mr. Greenberg noted, and his understanding from press reports is that the repayment will be made through sale of its assets. He said he hope the core insurance company would not be sold, but it appears the giant firm will be disassembled.
“It will no longer be the company I built,” he said.
There were still a lot of questions to be answered, said Mr. Greenberg, especially whether shareholders will have a voice in any decisions made about the company. As a major shareholder, he said he has not been briefed on plans for the company’s future, but expected the details to come out soon in a securities filing, which AIG will have to do as a publicly-traded entity.
He said he still believed that he could have raised the money necessary to keep the company afloat, and AIG did not need to turn to the government for help.
He repeated his claim yesterday that if he were still at the helm of the company, it would not be in the position it is today because he would have seen it coming.
“It has been very painful for me [to see this],” Mr. Greenberg said. “I spent a good part of my building this company.”
He said he was “bewildered” by the situation and was at a loss over how the entire situation got out of control as it did.
When asked about his having to leave the company in 2005 under a cloud of controversy over the company’s accounting that subsequently led to an earnings restatement, he said he would never have restated earnings.
“I do not believe there was anything improper,” he said. “What was acceptable in one set of years was not okay in another.”
“I didn’t do anything improper,” Mr. Greenberg reiterated, adding that others in senior management who were forced to leave over the accounting issue did nothing wrong, either.
As for the future of the economy as a whole, he said he has “great confidence in our country," adding that after a period of some pain and suffering, “we will come out of this okay.” Click for the whole story...