The Enduring Anger of Hank GreenbergBy
Hank Greenberg, who built American International Group (AIG) into one of the most powerful and complex financial entities in the world, is not a man who lets go easily. Since then-New York Attorney General Eliot Spitzer forced him out as chief of AIG during an accounting scandal in 2005, Greenberg has rarely missed an opportunity to chide his multiple successors or bemoan the folly of his ouster. Last summer he paid $15 million to settle SEC charges that, on his watch, AIG had used accounting gimmicks to paint too rosy a picture of its health. But that has probably only fueled his wrath. Greenberg fumes at the government's September 2008 bailout of AIG and does not discount the persistent chatter that it had as much to do with saving Goldman Sachs (GS), a major counterparty of AIG's, as it did with saving "the system." Now 84, Greenberg is busy building a new business as he pushes for an investigation into the decisions made by former Treasury Secretary Henry Paulson and others at the height of the financial crisis.
MARIA BARTIROMOA New York Times story last week suggested that you are poaching talent from AIG and reconstructing the AIG model at your privately held firm, C.V. Starr. Is your intention to build a competitor to AIG?
MAURICE "HANK" GREENBERGNo. Look, I'm building an insurance company and an investment company. We didn't poach anybody. We hired 13 people from AIG out of the 100,000-plus they have. We didn't poach them; they came to us. A lot of them had left AIG previously. I know one company in Switzerland that hired 130 people from AIG.
So you're saying AIG's talent is fleeing?
That's been going on for some time.
Are the restrictions on executive compensation imposed by pay czar Ken Feinberg driving talent into your arms?
They're driving people into anybody's arms, not just mine. Anybody in the insurance business. Why would someone running an important area of the company and doing a good job stay there for the maximum of $200,000 when they can maybe make $400,000 to $600,000 someplace else?
I'm sure you've thought about this, but what if Spitzer had not forced you out as CEO of AIG in 2005? How would things have been different?
It would have been 100% different. Nothing like [what has happened] would have taken place. [AIG] would have been strong. Oh, we would have had some losses, but they would have been minuscule compared with what we've seen.
How much money would you have saved the American taxpayer?
We wouldn't, in my judgment, have had to borrow any money from the taxpayer.
What would you have done differently?
I know for a fact that [Martin] Sullivan told everybody: "Just do everything you want, get as much business as you can, and don't worry about a goddam thing." Everything they did disregarded risk management. That's not the way you run a company. And the board sat on its tail. Frank Zarb did nothing. He was the goddam chairman. What did he do?
Did he understand what was happening?
Well, he was chairman. Shouldn't he have known? What did he get paid for as chairman? Just to go to a meeting?
And if I remember correctly, the board increased their salaries.
Yes, they did. They were working so hard, they increased their salaries.
If you had still been at the helm of AIG during that black week in September 2008, and it became clear AIG needed a bailout to survive, would you have gone to the government or tapped into your connections in China and elsewhere?
I'd have done everything I could to keep the government out. Absolutely.
Since you left AIG, there have been a string of executives in charge: Sullivan, Robert Willumstad, Edward Liddy, and now Robert Benmosche. How would you rate the job Benmosche is doing?
From what I can see, he's doing a pretty good job. He's an experienced executive. He ran MetLife (MET). I think he's a better leader. But if you can't pay reasonable compensation, I don't care how good you are.
Treasury Secretary Tim Geithner was asked on Meet the Press on Nov. 1 if he would like to see AIG prosper. And he said: "I'd like it to be successful enough that the taxpayer can get out." After that, he said he didn't care what happened.
That's a really great statement, isn't it? What's the government's goal here?
To liquidate the company and pay the taxpayer back. But the taxpayer will never be paid back by liquidating AIG. The only way to get paid back is to rebuild the company so it becomes viable again. Why was it decided AIG would be the sacrificial lamb?
Was it to save Goldman Sachs?
Maybe. But I think there's got to be a complete investigation of who did what and why.
How significant has this been in terms of wealth destruction for you?
Considerable. Not just for me, but for every one of the employees and executives at AIG. And how many shareholders? AIG had a market cap of $180 billion when I left. Goddam near worthless today.