Ex-AIG chief: Bailout will not succeed

The man who built insurance giant AIG from a startup to a global leviathan says the government’s plan to save the company is not working.

Maurice “Hank” Greenberg, AIG’s chief executive until March 2005, told Congress on Thursday that the largest bailout of the financial crisis had turned into a great burden on taxpayers.

“All plans so far advanced by the US government to date have failed, and the current plan, in my opinion, will not succeed,” Greenberg testified before the House Oversight and Government Reform Committee.

The US government currently holds an 80 percent stake in the embattled company — once the world’s largest insurer – after spending some $180 billion to unwind the company.

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After weeks of outrage over the greatest corporate failure in US history, Greenberg said he did not mismanage the company; the US government did, the Associated Press reported.

• A d v e r t i s e m e n t

He expounded that if the struggling AIG had simply been allowed to declare bankruptcy, taxpayers would have been spared from the mammoth spending.

“I share your concern, and the concerns of the American people, that the terms of the AIG bailout, has tremendous burdens on taxpayers,” Greenberg said.

Greenberg, the company’s chief executive for 38 years until he was ousted over an accounting fraud scandal, also blamed his successors for AIG’s problems.

“When I left the company, it was a healthy company… AIG’s business model did not fail – its management did,” Greenberg said.

The current AIG management, meanwhile, blames Greenberg’s leadership for creating the mountain of debt that brought the company to its knees.

The US government was forced to bail out AIG out of fear that the bankruptcy of the New York-based company — which had extensive links throughout the US and the world economy — could trigger an economic calamity.