Former American International Group Inc. CEO Maurice “Hank” Greenberg said Thursday a big reason why he wanted the insurance giant to join his lawsuit against the U.S. was that the company won compensation in the World Court from Iran and Pakistan after they expropriated the company’s assets in their respective countries.
AIG had considered joining a shareholder lawsuit against the U.S. government over its 2008 bailout of the company. The $25 billion lawsuit was led by Greenberg, who claims the bailout package was unfair and that it harmed shareholders. News reports that AIG could possibly join the suit sparked public outrage against the company. In early January, it said it wouldn’t join the suit.
Greenberg, who spoke before the National Press Club in Washington, D.C., said it was strange that shortly after AIG’s board refused to join in his litigation, it sued the Federal Reserve Bank of New York for its handling of AIG’s Maiden Lane II investment vehicle.
“I thought the Fed was part of the government,” said Greenberg, 87, who once served as the New York Fed’s chair.
Greenberg said he was blameless for AIG’s collapse during the financial meltdown because he left as CEO in 2005.
But when reminded that he was the company’s largest shareholder in the years after his departure, Greenberg shot back, “Yes, I was stupid,” he said, and added that management failed to tell him about the company’s exposure to credit default swaps.
Even more stupid, Greenberg claimed, was that after he departed AIG management abandoned most of the risk management controls his team had put in place.
Greenberg also gave low marks to the Federal Reserve for failing to give the firm access to the discount window before the bailout. He said the Fed could have given AIG eligibility for the low-interest loans by giving it a broker-dealer license or requiring it to buy a small bank.
On another issue, Greenberg said Federal regulators have gone too far in pushing for more independent directors at businesses. He said putting company executives on a board gives it the inside knowledge needed to do its job effectively.
He also faulted regulators for not paying enough money to get good workers.