Greenberg Is Not a Fan of A.I.G.’s Repayment Plan
Many parties were singing the praises of the American International Group’s plan to eventually repay its government-financed bailout. Maurice R. Greenberg, its blunt former chief executive, isn’t one of them.
Mr. Greenberg, who left from A.I.G. in 2005 amid its accounting scandal, harshly criticized the plan, in which the Treasury Department will expand its stake in the insurer to 92 percent from 80 percent in hopes of selling the holdings over time.
“I don’t see how the government sells any of its stock at any point in time with that overhang,” he told DealBook in a telephone interview on Thursday.
Mr. Greenberg is one of A.I.G.’s biggest private shareholders, and he didn’t take kindly to reports that he and other private investors shouldn’t make a windfall from their holdings.
“That’s what happened in the old Soviet Union,” he said.
(For context, here’s what The New York Times previously reported about the considerations given by Treasury and A.I.G. to private investors: “Issuing warrants could also help persuade private shareholders to stay put, even though their stake would be further diluted when the Treasury converted its preferred stock to common shares. Keeping private shareholders from selling en masse is considered necessary to protect the taxpayers’ interest.”)
Mr. Greenberg is on record as having opposed the structure of A.I.G.’s original bailout. In a nutshell, here’s his view: A.I.G. should not have bowed down to the collateral calls it faced amid its ratings downgrades, and should have instead called its counterparties’ bluffs in court. The government could also have guaranteed the Financial Products unit, the division at the heart of its problems, much as it later did with the likes of Citigroup.
Mr. Greenberg said he maintained open dialogue with his latest successor, Robert H. Benmosche — they spoke as recently as Thursday — and said while he considered the current chief executive “a good manager,” he disagreed with the business decisions that have been made recently.
For example, Mr. Greenberg doesn’t agree with A.I.G.’s plans to divest itself of two big life insurance units, American International Assurance and the American Life Insurance Company, to help pay back the bailout. The eventual spinoff of A.I.A. in particular pains Mr. Greenberg, who spent much of his early career building out A.I.G.’s Asian operations.
“I’ve been very candid about that,” he said. “Why would you sell off your business in the fastest-growing parts of the world, when you already have an advantage there?”
Be that as it may, however, Mr. Greenberg seemed resigned to a plan he opposes.
“There were lots of alternatives, but if you’re at the end of the road and there’s nowhere else to go, you end up falling off the cliff,” he said.
