business

By Michael R. Crittenden

Of DOW JONES NEWSWIRES

WASHINGTON -(Dow Jones)- American International Group Inc.'s (AIG) former chairman blamed the executives who replaced him for the company's collapse, refusing to accept any responsibility despite coming under fire from lawmakers on his role in fostering the firm's financial products division.

"I think they got greedy. I think they wrote considerably more business than they should have," Maurice Greenberg told the House Oversight and Government Reform Committee Thursday.

Greenberg, who headed AIG for 38 years before departing under pressure in 2005, said the U.S. government's effort to prop up the firm - to the tune of $ 170 billion in government aid - has "failed" and that the company should be restructured. Liquidating the firm and selling off its assets should be abandoned, he said, and the government should reduce its stake in the firm from 80% to 15%.

"My approach focuses on reconstructing and sustaining AIG so that it will in the future be a healthy and vibrant company once again," Greenberg said in his testimony before the House Oversight and Government Reform committee.

Added Greenberg: "Let me be clear: AIG's business model did not fail - its management did."

Lawmakers wanted more from Greenberg, pressing him on his ongoing litigation with AIG and what role he played in fostering AIG's financial products division, the unit that wrote vast amounts of credit-default swap contracts that ended up forcing the government's rescue of the firm.

"Mr. Greenberg's testimony should be taken with a grain of salt," Rep. Darrell Issa, R-Calif., said. "At the very least, we must acknowledge these biases."

Rep. Elijah Cummings, D-Md., was more direct, asking Greenberg during a heated exchange, "Do you take any responsibility at all?"

Greenberg, accompanied by high profile attorney David Boies, refused to accept any blame.

"No I don't," Greenberg said, referring to subsequent losses at the financial products division and downgrades of AIG's ratings. He said the management that took over when he left the firm "must have paid very little attention" to the growing problems that led to the firm's demise.

Additionally, Greenberg said billions in government funds should not have been paid to AIG's counterparties; giving other financial firms guarantees would've been a better option.

"These cash payments to [credit-default swap] counterparties should never have occurred," Greenberg said. "It would have been more beneficial for the American taxpayer if the federal government had walled off AIG Financial Products ... and provided guarantees to AIGFP's counterparties rather than putting up billions of dollars in cash collateral to those counterparties."

source :CNNmoney.com

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