Housing Sector Far From Recovery: Hank Greenberg

Former AIG chief executive Maurice "Hank" Greenberg sees more tough sledding for the housing sector, thinks operating on the basis of fear is the worst thing investors and politicians can do and hopes some day to return, in some capacity, to his old firm.

"I don't think we've bottomed out yet in the housing sector," he told CNBC's Carl Quntanilla at the Beijing Olympics. "I'm concerned that even not subprime, but more regular mortgages are beginning to suffer because of the inability to take care of the increase in food prices and gasoline prices."

Greenberg, now chief executive of CV Starr, doesn't see any sort of firm recovery until at least the middle of next year, and even then, only a mild recovery.

"I don't think housing prices will go back to where they were before this began," he said. "I think they may come back a bit, but nothing like what they were."

Watch Part One of the interview at left.

He was asked what he considers to be a legitimate "buy" signal.

"It won't be one thing, it'll be a whole series of things," he said. "I'd rather be a moment or two too late, than too soon."

Although there may be more trouble ahead, he cautioned against policymakers, business leaders and investors working on the basis of a worst-case scenario.

"We can't let fear dominate our thinking," he said. "That's the worst thing we can do."

His former company, AIG, posted a $5.4 billion quarterly loss last week and its shares wound up down 7 percent for the week. But Greenberg rejects criticism of AIG as "too complex."

Part Two of the interview.

"One of the beauties of AIG was that diversification was an advantage," he said. "The property-casualty business (runs) in cycles...of course, you have a big life operation, a big international operation in 130 countries, and so there was that balance."

Would he ever consider coming back—as an officer or director—to the firm he built?

"(AIG chairman and chief executive Robert) Willumstad said when he was elected CEO that he was going to reach out," Greenberg said." We've had two or three conversations; to date we haven't resoved anything."

"AIG had a special culture, and it hurts to see where it is today," he said.