Forced to retire from AIG in 2005 and still reportedly angry about his removal, Hank Greenberg offered what was, at times, a blistering testimony about the troubled path his former company pursued since his departure.
Appearing before the House Oversight and Government Reform Committee, the 83-year-old lashed into his former colleagues for essentially shedding the skin that had made the company successful. "When AIG lost their AAA rating, they wrote as much business in nine months as we wrote in seven years," Greenberg told lawmakers. "That became a different book of business."
As for the much-maligned Financial Products unit that brought the company to its current doldrums, Greenberg said that executives had shifted "the way the unit did business," accelerating the sales of credit default swaps.
His indictments of his old company did not end there. Greenberg, who left under charges of fraudulent business practice, said that he was "stunned" that AIG continued to employ some of the same officials who had failed to initially recognize the danger of those swaps.
"It stuns me that they are still there," he said.
And when asked about the issue of compensation, Greenberg made the case (somewhat grudgingly) that the AIG executives didn't deserve their bonuses.
"I haven't read the bill, but my own sense is that over any period of time, it would have been best to not have the government setting compensation rules for business. Now I recognize that when you take a great deal of money from the government, the government has to have a say in the compensation of a company. But if the compensation is not competitive with the marketplace generally, it doesn't help to have people who will not perform at the level that you want them to perform because they are not being compensated adequately. Having said that, I would agree with anyone that compensation in the financial sector got out of hand in our country."
Asked to clarify how this applies to AIG, he said: "If they have not protected the assets, obviously, they should not be compensated. They probably should be fired...They should not get bonuses."
And yet, the harshest of Greenberg's words may have been directed at the government program for propping up the insurance giant. Calling the approach, "failed," he said that AIG should pay back the taxpayer money and search for private capital investments. "AIG is not too big to be managed," he said, "it is too big to be managed poorly."
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