While two former CEOs of American International Group took a beating from Congress yesterday, a third called in sick.
Maurice Greenberg, who led the company until 2005, bowed out of his scheduled appearance before the House Committee on Oversight and Government Reform, citing illness.
In prepared testimony, he criticized the Federal Reserve’s $85 billion loan to the company as “a bad deal for AIG’s tens of thousands of employees anad millions of shareholders.”
To pay off the loan, he said, AIG will have to hold a fire sale of profitable divisions. Stockholders would have fared better if AIG had filed for bankruptcy, he said.
Greenberg also criticized the company’s upper management for weakening internal risk controls.
“AIG had a unique culture when I was its CEO, particularly in comparison with the way many large public companies operate today,” he said. “Neither I nor other members of my senior management team had employment contracts. I received no severance package in connection with my retirement, and I never sold a single share of AIG stock during the more than 35 years that I served as CEO.”
Greenberg continues to hold substantial stock in the company. At the end of last month, he and his firm, Starr International, owned more than 268 million shares, or nearly 10 percent.
He was wise to avoid the appearance on Capitol Hill. Two other former AIG CEOs - Robert Willumstad and Martin Sullivan - were left having to explain not only the company’s investment in high-risk credit default swaps, executive pay packages and an expensive company retreat that occurred after their departures.
Sullivan succeeded Greenberg as CEO, leaving the firm in June. Willumstad then took the reins, leaving at the time of the bailout.
“I think you should be apologizing to the American people,” Rep. Carolyn Maloney of New York told the two.
Committee Chairman Henry Waxman revealed that a week after the federal bailout, the company had spent more than $440,000 for a meeting at an expensive California resort. The tab included $200,000 for rooms and $23,000 for spa treatments.
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