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FIRST ON CNBC: CNBC TRANSCRIPT: CNBC'S MARIA BARTIROMO SITS DOWN WITH RETIRED AIG CHAIRMAN & CEO HANK GREENBERG TODAY ON CNBC'S "CLOSING BELL WITH MARIA BARTIROMO"

WHEN: TODAY, TUESDAY, SEPTEMBER 16 AT 4:40PM ET

WHERE: CNBC'S "CLOSING BELL WITH MARIA BARTIROMO"

Following is the unofficial transcript of a FIRST ON CNBC interview with retired AIG Chairman & CEO Hank Greenberg today on CNBC's "Closing Bell with Maria Bartiromo" at 4:40PM ET today. The full interview can also be found on CNBC.com.

All references must be sourced to CNBC'S "Closing Bell with Maria Bartiromo."

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BARTIROMO: FORMER AIG CHAIRMAN & CEO HANK GREENBERG DISCLOSED IN A REGULATORY FILING TODAY THAT HE AND A GROUP OF INVESTORS ARE CONSIDERING POSSIBLY MAKING LOANS TO AIG DISCLOSING THEIR OPTIONS IN A 13D SUGGESTING HE MAY MAKE A RUN FOR THE EMBATTLED INSURANCE GIANT ONCE AGAIN AS THE COMPANY STRUGGLES TO RAISE NEW CAPITAL TO AVOID FILING FOR BANKRUPTCY. THE FEDERAL RESERVE MEANWHILE IS WORKING WITH WASHINGTON RIGHT NOW TO ADDRESS AIG'S CAPITAL NEEDS AND TODAY I SAT DOWN WITH HANK GREENBERG FOR ANOTHER FIRST ON CNBC INTERVIEW AND ASKED HIM IF HE THOUGHT THE FEDS PLAN WOULD WORK.

HANK THE FED IS TRYING TO ENGINEER A PRIVATE SOLUTION, ASKING JPMORGAN, GOLDMAN SACKS TO ARRANGE $75 BILLION TO SUPPORT AIG.IS THAT THE RIGHT NUMBER?

GREENBERG: I HOPE THEY CAN COME UP WITH A PACKAGE WHETHER $75 BILLION IS RIGHT, I DON'T KNOW.I HAVEN'T BEEN IN THE COMPANY TOLOOK AT THE BOOKS AND DETERMINE WHAT IT SOUNDS LIKE. SOUNDS LIKE A BIG NUMBER TO ME GIVEN THE $20 BILLION MADE AVAILABLE BY THE GOVERNOR. TOTHE PARENT COMPANY. THE FACT THAT THEY COULD SELL ASSETS. NOT THE BEST TIME, BUT THEY COULD.I WOULD HAVE THOUGHT THAT $75 BILLION WAS A BIG NUMBER AND THEY COULD SELL FOR SOMETHING LESS. AND REMEMBER THE SUBSIDIARIES ARE EARNING SUBSIDIARIES THEY ARE MAKING A PROFIT WHICH WILL BE A CONTRIBUTION TOWARDS WHATEVER DEFICIT THERE IS. IF YOU STABILIZE THE PRICE OF THE STOCK, IF INDEED THE SEC IS GOING TO PROHIBIT THE KIND OF SHORT SELLING THAT WAS TAKING PLACE, THAT WAS HURTING THE CREDIT DEFAULT SWAP BUSINESS BY REQUIRING MORE AND MORE COLLATERAL.SOMETHING LESS THAN $75 BILLION COULD DO IT.

BARTIROMO: WHAT ARE THE IMPLICATIONS OF A FURTHER DOWNGRADE BY THE RATINGS AGENCIES?

GREENBERG: I THINK THEY HAVE TO GO AND I WOULD HOPE THAT THE RATING AGENCIES WOULD ACT MORE RESPONSIBLY AND MORE PATIENTLY AND RECOGNIZE THIS IS NOT A COMPANY THAT IS INSOLVENT, BUT A SOLVENT COMPANY AND A GLOBAL COMPANY AND AN IMPORTANT INSTRUMENT TO THE UNITED STATES.VERY IMPORTANT. AND I THINK THAT WOULD BE A TRAGIC MISTAKE.

BARTIROMO: WHAT ARE THE CHANCES THAT WE SEE A BANKRUPTCY FILING?

GREENBERG: IT DEPENDS ON HOW SUCCESSFUL THE MORGAN STANLEY AND JP ARE IN RAISING FUNDS AND WHETHER EVEN IF THEY RAISE X AMOUNT AND THE FED TOPS IT UP WITH A BRIDGE LOAN.

BARTIROMO: GLOBAL INVESTORS IMPACTED AS WELL AS US INVESTORS AND GIVE ME YOUR SENSE -- YOU HAVE A SPECIAL RELATIONSHIP WITH THE CHINESE AND INVESTMENTS IN RUSSIA. CAN YOU CHARACTERIZE HOW FOREIGN INVESTORS HAVE REACTED OR THE HIT THEY HAVE TAKEN AS A RESULT OF HOLDING THE PAPER OR SECURITIES.

GREENBERG: THEY ARE ALL, I THINK, STUNNED.THAT WAS THE STRONGEST COMPANY IN THE FIELD IN THE WORLD. THE BIGGEST AND THE STRONGEST. ISFACING BANKRUPTCY. SO CLEARLY AIG STOCK IS HELD WORLDWIDE AND NOT ONLY THE COMMON STOCK, BUT MANY OF THE FIXED SECURITY BONDS AND PREFERREDS. THEY ARE HELD WORLDWIDE.MANY WILL HAVE COUNTER PARTIES AND THE FALLOUT WILL BE JUST VERY, VERY SIGNIFICANT.

BARTIROMO: CAN YOU PUT THIS WHOLE ENVIRONMENT INTO PERSPECTIVE FOR US.BEAR STEARNS, LEHMAN BROTHERS AND MERRILL GET ACQUIRE AND NOW AIG HOW DOES THIS STACK UP AGAINST ANYTHING YOU HAVE SEEN?

GREENBERG: I HAVE NOT SEEN ANYTHING LIKE THIS. IT STARTED WITH THE HOUSING SECTOR.THE OVER LEVERAGE THAT HAD TAKENPLACE OVER THE LAST DECADE, IF YOU WILL. WHERE YOU CAN LEVERAGE 20 OR 30 TIMES THE EQUITY AND CHEAP MONEY AND CREDIT WAS VERY, VERY CHEAP AND RISK MANAGEMENT WAS A WORD RATHER THAN A PRACTICE. THE CONSEQUENCES ARE THE OUTCOME.

BARTIROMO: THE LEVERAGING IS GOING AWAY OR HAS GONE AWAY. TELL ME HOW YOU THINK THIS WILL CHANGE.

GREENBERG: IT WILL BE MUCH DIFFERENT. MANY BUSINESSES THAT LIVED ON LEVERAGE, MANY INVESTMENT BANKS FOR EXAMPLE NOT JUST ON M&A. I WILL HAVE TO ACCESS TO A BIG BALANCE SHEET FOR THEM TO CONTINUE TO HAVE A VIABILE BUSINESS. SO THAT WILL BE A CHANGE. I THINK YOU WILL SEE A MORE CAUTIOUS, MORE CONSERVATIVE OUTLOOK AND SO YOU ARE NOT GOING TO SEE THESE GYRATIONS IN EARNINGS GOING FORWARD WHEN WE GET THROUGH ALL OF THIS LIKE WE HAD BEFORE. MORTGAGES ARE NOT GOING TO BE JUST GOING IN AND BUYING A BOTTLE OF MILK. YOU WILL HAVE TO QUALIFY TO GET A MORTGAGE.SHOW THAT YOU CAN PAY FOR YOUR MONTHLY PAYMENTS. IT WILL CHANGE.

BARTIROMO: IT'S INTERESTING THAT THEY SAY INVESTMENT BANKS WILL NEED DEEPER POCKETS AND DEPOSIT BASES OR A LARGE BALANCE SHEET AND WE LOOK AT AIG WITH ONE OF THE BIGGEST BALANCE SHEETS AND TODAY WE WATCHED THE COMPANY TEETERING. IT CAN HAPPEN TO ANYBODY? HOW DO YOU JUSTIFY THAT?

GREENBERG: HAVING A STRONG BALANCE SHEET BUT NOT LIQUIDITY FOR THE MOMENT, YOU HAVE TO KEEP LIQUIDITY IN MIND IN RUNNING A COMPANY. YOU LOOKAT SOLVENCY YOU LOOK AT LIQUIDITY AND MAKE SURE YOU HAVE SUFFICIENT CASH ON HAND OR READILY AVAILABLE TO MEET CONTINGENCIES. PART OF WHAT YOU ARE SUPPOSED TO DO. THE FACT THAT THIS IS OCCURRING SHOULD NOT PENALIZE THEM. MANY OF THESE THINGS ARE OUT OF THEIR CONTROL. THE ENVIRONMENT WAS OUT OF THEIRCONTROL. WAS RISK MANAGEMENT THE WAY IT SHOULD HAVE BEEN? I CAN'T ANSWER THAT. I DO KNOW THAT FUNDAMENTALLY IT IS A HEALTHY COMPANY AND IT SHOULD BE SAVED.

BARTIROMO: TALK TO US ABOUT WHAT AIG MEANS TO THE FINANCIAL SYSTEM AND THE POSSIBILITY OF SYSTEMIC RISK HERE.WHY IS AIG SO IMPORTANT?

GREENBERG: IT HAS SO MANY COUNTER PARTIES, NUMBER ONE. NUMBER TWO, ITS INSURANCE BUSINESS TOUCHES ALMOST EVERYBODY IN THE WORLD IN ONE WAY OR THE OTHER. IT'S THE LARGEST AIRLINE LEASING COMPANY IN THE WORLD. IT'S GOT BUSINESSES THAT AFFECT ALMOST EVERYTHING AND EVERYBODY AROUND THE WORLD. WHETHER IT'S LIFE INSURANCE OR PERSONAL OR COMMERCIAL INSURANCE.HURRICANE IKE AIG WILL BE INVOLVED IN PAYING TONS OF CLAIMS.IT TOUCHES EVERYBODY. I THINK TO HAVE THAT KIND OF INSTITUTION SUDDENLY TOPPLEIT'S NOT ON THE NATIONAL INTEREST.

BARTIROMO: IS THERE ANYTHING AIG CAN DO IN CASE WE DON'T SEE A SUCCESSFUL OUTCOME FROM THE BANKS TRYING TO RAISE THIS MONEY. 75 BILLION OR 40 BILLION OR WHATEVER IT IS, WHAT ASSETS SHOULD AIG BE SELLING TO RAISE MONEY?

GREENBERG: THE ONES I TALKED ABOUT BEFORE, BUT IF YOU CANNIBALIZE AIG AND TAKE AWAY THE CORE BUSINESSES, THEN YOU DON'T HAVE AIG. WHAT YOU HAVE IS A SHELL OF WHATWAS A GREAT COMPANY. I THINK THE BETTER SOLUTION IS TO WORK ON THE LIQUIDITY ISSUES, BUT IF YOU DEAL WITH THAT, YOU'VE DEALT WITH THE PROBLEM.

BARTIROMO: WHY DO YOU THINK THE BOARD WAS ASLEEP AT THE WHEEL?

GREENBERG: I DON'T KNOW. I WASN'T THERE. I MEAN, IT'S HARD TO UNDERSTAND. IT'S HARD TO UNDERSTAND WHAT WENT WRONG.HOW IT COULD BE SO FAR OUT WITHOUT ANYBODY KNOWING ABOUT IT.

BARTIROMO: THIS MUST BE INCREDIBLY TOUGHFOR YOU, WATCHING THIS UNFOLD.YOU BUILT THIS COMPANY OVER A 35-YEAR PERIOD.YOUR WEALTH IS TIED UP.HOW SIGNIFICANT HAS THIS BEEN FOR YOU?

GREENBERG: TERRIBLE. JUST TERRIBLE.YOU KNOW, IT'S A TRAGEDY BUT IT DOESN'T HAVE TO -- I WANT TO LEAVE IT, SAYING IT DOESN'T HAVE TO HAPPEN.I THINK THE -- I DO THINK THAT THE -- IT'S IN OUR NATIONAL INTEREST TO PREVENT THIS FROM HAPPENING.THIS IS BEYOND A COMPANY AND BEYOND ITS SHAREHOLDERS. IT'S IN OUR NATIONAL INTEREST. AND WE ARE WAITING TO SEE

BARTIROMO: AND WE ARE WAITING TO SEE WHAT COMES OUT OF THAT FED MEETING AS FAR AS WHETHER OR NOTWE WILL SEE SUPPORT FROM THE GOVERNMENT OR MAJOR BANKERS.YOU CAN SEE MY INTERVIEW WITH HANK GREENBERG ON OUR WEBSITE, CNBC.COM RIGHT NOW.


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