Greenberg Says He Lost $2 Billion in AIG Downfall

Former AIG Chairman Hank Greenberg said he's suing the company to recoup some of the $2 billion in personal wealth he lost when the insurance titan collapsed.

Greenberg, who lead American International Group from 1968 until 2005, before the company's credit default business capsized and the government had to rescue it, told CNBC he was deceived by the company and is suing for securities fraud.

He said the current leadership, and CEO Ed Liddy in particular, are ill-equipped to run the multinational company.

"I was financially harmed. I never sold a share of stock in AIG over the years that I ran the company," Greenberg said. "Yeah, I was financially hurt very badly."

Turning the company over to Liddy, the former head of Allstate and a board member at Goldman Sachs , was akin to taking "someone who's been driving a horse and buggy company and (putting) them into a spaceship and saying, 'here, run that.'"

Greenberg said AIG deceived shareholders when it told them in 2007 that it didn't have CDS exposure, only to later disclose that it had billions of dollars in exposure that would require government intevention.

The government ultimately took a 79.9 percent stake in AIG and may have to plow more money into the company as it struggles back to stability.

Greenberg called the government's initial rescue plan for AIG "a disaster" and said a more workable solution would have involved splitting the company's CDS exposure into a separate company.

"Take your existing business and spread the loss payment back to the government over, what, 15 years or so, whatever, have a high rate of interest that they can afford and cut the 79.9 percent down to, say, 15 percent. You could have raised private capital then," he said. "I checked it out. I went around to several sovereign funds...holding it together would have been the best thing."

Meanwhile, on the overall state of the markets and the economy, Greenberg predicted more difficult times ahead.

"I think that we keep zigging and zagging. There's no consistency," he said. "We seem to make it up as we go along. It's troubling. People are scared, people have lost a lot of money."

© 2009 CNBC.com