AIG’s Ex-CEO Greenberg Scheduled for House Committee Testimony

By | April 2, 2009

The chairman of a U.S. House oversight panel said Wednesday he will soon call the chief executive of American International Group Inc. to testify, amid the committee’s ongoing probe of the fall of the insurance giant.

Democratic Rep. Edolphus Towns, chairman of the House Oversight and Government Reform Committee, told Reuters in an interview that he planned to call Edward Liddy sometime in April or May.

“We want to take a very serious look and see if legislation is needed to prevent this from ever happening again,” Towns, a lawmaker from New York City, said.

Maurice “Hank” Greenberg, the tarnished former CEO and creator of the controversial financial products unit of AIG, is set to testify on Thursday (10 a.m. EST) before Towns’ panel. Lawmakers are scrambling to grill officials on the rise and fall of AIG, of which taxpayers now own a 80 percent stake.

At a similar hearing last year Greenberg was a no-show, citing illness. He will be the sole witness at the panel on Thursday.

Towns and other lawmakers will probe him about the financial products unit, created under his watch in 1987. He will be asked to explain how the financial products unit operated during his tenure, and what he knew about the risky credit default swap program.

Greenberg, who was CEO for 35 years, has sought to distance himself from the problems leading to the stunning losses at the company, which has led to as much as $180 billion in taxpayer funds being used to prop up the company.

In a statement issued in advance of the hearing, Greenberg said he would present a plan to revamp the government’s aid to AIG, one that relies on “government guarantees and long-term government-funded debt and encourages private capital to replace government ownership over time.”

He has floated this idea before.

Greenberg was forced out by AIG’s board in 2005 after he refused to cooperate with an internal investigation into off-balance sheet transactions that were being scrutinized by the U.S. Securities and Exchange Commission and various state attorneys general.

That scandal did not have any relationship to the financial troubles that nearly toppled AIG last September.

AIG and Greenberg are locked in legal battles over several of these issues.

“Given that Hank Greenberg led AIG into the credit default swap business, has repeatedly refused to testify under oath about a transaction he initiated when he was still AIG’s CEO, and is being investigated by the SEC and the Justice Department, we don’t understand how he can be viewed as having any credibility on any AIG issue,” AIG spokesman Mark Herr said.

(Additional reporting by Lilla Zuill in New York; Editing by Bernard Orr, Phil Berlowitz)

Topics Legislation AIG

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