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Friday, April 3, 2009
AIG: Ex-boss Greenberg in denial

Taxpayer-backed American International Group responded last night to ex-Chairman Maurice "Hank" Greenberg's self-serving testimony in Congress yesterday:

"Hank Greenberg continues to deny his role in allowing AIG Financial Products to write the multi-sector credit default swaps which sowed the seeds for AIG's troubles.... In more than three hours of testimony he evaded the questions and talked about another line of business, 'regulatory capital' swaps, which had nothing to do with AIG’s losses or liquidity problems.

"He refuses to acknowledge that he approved entry into the credit default swap business, approved more than $40 billion of swaps written on CDO’s containing sub-prime loans, and didn't hedge or put up reserves against them. 

"The regulatory investigations and litigation surrounding Mr. Greenberg calls into question his credibility and motivations for attacking AIG.

"Mr. Greenberg's claim that he would have hedged the entire multi-sector credit-default swaps book after AIG was downgraded in 2005 -- which triggered no collateral calls -- is implausible and a man with as tarnished credibility as his should not get the benefit of any doubt. The claim that he could have hedged the entire book, or forced counterparties to renegotiate collateral provisions, is not grounded in reality. It is also at odds with the fact that under his tenure none of these trades was ever hedged...
  
"Rep. (Jason) Chaffetz (R-Utah) posed an excellent question: Where are the AIG shares held by (Greenberg's personal investment company? Mr. Greenberg’s answer -- that they are in a 'vault' somewhere -- was less than candid. As we have said in our suit to recover these assets, Mr. Greenberg has in fact sold more than $4 billion worth of the shares and he should be asked what he has done with those proceeds."
Posted by Joseph N. DiStefano @ 8:34 AM  Permalink | Post a comment
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About Joseph N. DiStefano
Joseph N. DiStefano writes this blog to feed his PhillyDeals column, which is printed in the business pages of The Philadelphia Inquirer every Sunday, Tuesday, Wednesday, Thursday and Friday. Joe has worked at the Inquirer, mostly, since 1988. He has also written for Bloomberg and Gannett, authored the book Comcasted, majored in economics at Penn, and fathered six children. Reach Joe at 215-854-5194 and JoeD@phillynews.com

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