Blame game for AIG's Greenberg

As far as Maurice Greenberg is concerned, the staggering AIG mess has nothing to do with him. You know what it's like. You're in charge and everything is hunky dory, then you leave and it goes to the dogs.

Kate Gibbs • 03 April 2009 • SME Law

Greenberg played the blame game when summoned to testify before the House Oversight and Government Reform Committee in the US last week, urging that counterparties including Goldman Sachs, Deutsche Bank and Société Generale repay the $50 billion that AIG had to fork out to make good on its credit default contracts.

The beleaguered Greenberg, who was forced out of AIG in an accounting fraud investigation four years ago, testified before an irate Congress, and few bought his story.

Lawmakers didn't accept that the government was to blame for the multibillion-dollar debacle at the insurer, as Portfolio.com reports.

Elijag Cummings, a Maryland Democrat, noted Greenberg forgot to mention that many of the risky bets that tripped the insurance giant were made before he left the company. Even before he sat before Congress, the credibility of Greenberg, now 83, was questioned in a very public Republican vitriol.

The Wall Street Journal covered the details of the AIG bailout number two in November, stipulating that under the terms being finalised the government would replace its original $85 billion loan with a two-year duration with a $60 billion loan with a five-year duration. The rest of the terms saw AIG make a saving of $2 billion a year, against which it had to put $6 billion in cash into two new special-purpose vehicles, designed to help sort out any problems at the insurer's securities-lending business.

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