US Made Mistake Taking Huge Stake In AIG: Greenberg
The U.S. government made a mistake taking a huge stake in American International Group because it turned a "national asset" into a different company, said former chairman Maurice R. Greenberg.
"It’s not the same company," he told CNBC Thursday. "Many of the better assets have been sold. The life insurance business internationally has been sold and that was the crown jewel. So it’s basically a property/casualty company, a domestic life company and really some odds and ends, but that’s it."
Greenberg, now chairman of C.V. Starr & Co., was forced out of AIG in 2005 after securities regulators accused him of altering financial records to inflate the company's earnings between 2000 and 2005. He agreed to pay $15 million to settle those charges in 2009.
Greenberg said between the time he left the company and the government takeover, AIG had expanded from insurance and financial services into much riskier instruments, which nearly caused its failure.
"They did more credit default swaps in nine months after I left than I did in seven years," Greenberg said. He insisted the government didn't have to take over the company and force those asset sales, but instead should have given it a bank holding-company license, as he said the government did with Hartford Insurance.
But when it stepped in, the government took too big a stake, he said. The government still holds over 70 percent of AIG after the "re-IPO" earlier this week.
"If they had not done that, if the government owned under 50 percent of the company, the stock would be at a higher price and they get rid of it much sooner," said Greenberg. "Who wants to invest in a government-controlled and -owned company?"
Greenberg said he has not bought more AIG shares this week, but C.V. Starr is making a "significant investment" in a joint venture with Shanghai insurance company Dazhong.
"We will appoint the general manager, they will appoint the chairman," he said. "I’m quite excited about the potential."
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