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Interview With Former AIG CEO Hank Greenberg: Criticizing the Bailout in Hindsight

Few people were as enraged at the terms of AIG's (NYSE: AIG  ) 2008 bailout as its former chairman and CEO, Hank Greenberg. Greenberg, who left AIG in 2005, is suing the government for $25 billion. "We have a Constitution in the United States, and there's a provision against unlawful taking by the government," he says, "You can take anything you want, but you have to pay for it."

I sat down with Greenberg last week, and we talked at length about the bailout and his current lawsuit. Here's what he had to say (transcript follows):

Morgan Housel: Hank Paulson talks in his book about how, in hindsight, it's easy to say, "We should have done this. We did this wrong" ... and they admit that they did things wrong, in hindsight, but they had such short time constraints -- some of these bailouts they had to put together in literally hours -- that when you're under those constraints, you're going to make big mistakes that are only visible in hindsight.

What's your response to that?

Hank Greenberg: Well, I think that's an easy statement to make. They were looking after some firms and didn't care about other firms. It's very simple.

AIG was used. Let's face it, AIG was used. The government didn't do badly. They made about $23 billion on AIG.

Morgan Housel: Your lawsuit is for $25 billion, based on the terms of the deal.

Hank Greenberg: Correct.

Morgan Housel: That goes to C.V. Starr? That goes to AIG shareholders?

Hank Greenberg: It goes to shareholders after deducting, obviously, the expense of the lawsuit.

Morgan Housel: Do you think we've learned anything over the past five years, or do you think we're doomed to keep making these mistakes again?

Hank Greenberg: I think the pendulum sometimes runs too far in one direction, has to come back to the middle. That's the way we've always been, unfortunately. Are we going to make the same mistake next time around?

Depends when next time around is. Is it going to be next month? I think we've learned. If it's about 5-10 years from now, I'm not sure we've learned.

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  • Report this Comment On March 15, 2013, at 3:38 PM, tomd728 wrote:

    This bridge troll is the epitomy of an ingrate who had the hired talent to build AIG with great product and global footprint.

    He was over paid and compensated for years with a Board full of cronies (so what's new ?).

    When it dawned on him to lever up the balance sheet at AIG, he put this enterprise smack in front of an avalanche of dreadful CDOs while writing the insurance behind them.

    Where's the love ? Anyone seen John Paulson or Lloyd Blankfein ? Did he think AIG was above being mauled by GS ? The TARP boys had a tough call AIG no policy coverage worldwide on their assorted product.It worked out but now Greenberg wants his day in court.

    Perhaps his major gripe with this grave injustice is his unceremonious ousting. If they threw him out a window he might have something to litigate.

    His suit is specious at best and preposterous but a guy can always find a law firm in a list of old pals especially if he can pay the freight. Broke ?

    C'mon look more like a Batman villain every day.

    I can only hope they call Mr.Hank himself and ask him "What the hell went on there under your reign ?"

    This guy had a personal butler in full formal wear hang up his coat,fetch his coffee,and run errands.

    It's really too bad that Hank lost 90 % of his net worth (or so he claims). Too bad because justice might be served if he lost 100 %.

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