Exclusive Interview with Former American International Group Inc (AIG) CEO Hank Greenberg: How AIG Went Off Track

Page 1 of 2

I sat down with former American International Group Inc (NYSE:AIG) chairman and CEO Hank Greenberg this week. We talked about everything from American International Group Inc (NYSE:AIG)’s early days, its growth, to its downfall and bailout in 2008.

Below is one of the most interesting clips from the talk. I asked Mr. Greenberg a simple question: When did American International Group Inc (NYSE:AIG) go off track?

American International Group Inc (NYSE:AIG)Here’s what he had to say (transcript follows):

Morgan Housel: When did AIG go off track, from being a first-class global organization to where it found itself in 2008?

Hank Greenberg: I don’t think AIG went off track. We had an Attorney General in New York, now a disgraced Attorney General …

Morgan Housel: There’s actually a quote in your book. I’m going to quote it here. It says, “Eliot Spitzer, an elected public prosecutor in New York, sparked the process that would drive AIG to near destruction.”

Hank Greenberg: That’s correct.

Morgan Housel: When people think about AIG’s downfall, they think of derivatives and leverage and liquidity. They often don’t think about Eliot Spitzer. What was his role?

Hank Greenberg: Very simple. I was on a conference call with analysts, and one of them asked me, “What’s the regulatory environment like today?” This is after Enron and Sarbanes-Oxley.

There was a change in the atmosphere. Boards of directors became less supportive of companies and their management. They were more concerned about their own liability after Enron. When I was asked this question, I said, “A foot fault is like a murder charge today,” which was a way of trying to dramatize the change that had taken place.

If you read the book, you’ll see there’s an affidavit by a man called Vacco, who had been the prior Attorney General of New York, and he happened to be in Spitzer’s office when one of Spitzer’s deputies came in and said, “Did you hear what Greenberg just said on an analyst call?”

He said no. He repeated that I said a foot fault is like a murder charge. Spitzer then said, in front of this prior Attorney General, “I’m going to take Greenberg down.” He used some other language which was just a disgrace for him to be saying that. It’s in the book.

He used that. He was running for governor. He wanted to take down big names, and he went on a campaign to do that.

He focused on a transaction we did with Warren Buffett’s company, General Re, which was our largest reinsurance partner. It was five years old, it had no effect on shareholders’ equity or earnings per share — nothing to do with that. It was a peanut transaction, and he tried to make that into a murder charge, and was successful. The board just gave up supporting the CEO.

Page 1 of 2
blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months Click to see monthly returns in table format!

Lists

The 10 Laziest Countries in the World

The 10 Most Polluted Countries in the World

The 10 Most Dangerous Cities in America 2014

The Top 10 Gold Producing Countries in the World

The 10 Tallest Buildings in the World

The 10 Richest Stand Up Comedians in the World

The 10 Fattest Countries in the World

The 5 Best Summer Jobs for Teens

The 10 Most Religious Countries in the World Keeping the Faith

The 10 Most Educated Countries in the World

The 10 Most Popular Cell Phones in the World

The 10 Drunkest Countries in the World

The 10 Most Expensive Private Schools in the World

The 10 Smallest Countries in the World

Walking Dead Season 5 Spoilers You’ll Wish You Didn’t Know

The 10 Poorest Countries in the World

The 10 Greenest Countries in the World

The Top 10 Countries with the Highest Population in the World

The 10 Most Visited Countries in the World

The Top 10 Star Wars Characters in the Iconic Series

The 10 Most Expensive Android Phones in the World

5 Reasons Why The Illuminati Is Real and a Threat to Society

The 6 Scariest Halloween Costumes Ever Screamed At

The 4 Biggest Hedge Fund Managers in the World Today

The 15 Most Densely Populated Countries in the World

The 10 Biggest Tea Drinking Countries in the World

Top 6 Ways to Improve Your Checkout Process and Close Sales

The 5 Most Profitable Online Businesses You Can Start Today

The 20 Most Profitable Hospitals in the US

The 5 Most Profitable Home Businesses to Start

The 7 Teams that Will Win the Stanley Cup in 2015

The Top 10 Most Expensive Digital Cameras to Snap Stunning Shots With

The 10 Highest Quality Fast Food Restaurants In America Today

The 8 Best Halloween Decorating Ideas to Spook Up Your House

10 Marvel Women that Should Get a Movie Right Now

The 20 Best Remixes of Popular Songs that Will Make You Forget the Originals

7 Most Expensive Cities in the World

5 Least Expensive Cities in the World

10 Celebrities Who Believe In Scientology

10 High Margin Food Products to Build a Business Around

The 10 Most Expensive Clothing Stores in the United States to Get Decked Out At

The 5 Biggest Kickstarter Scams That Swindled Backers’ Donations

The 10 Most Expensive Boarding Schools In the World

50 Crazy Facts About Japan You Won’t Believe

Top 10 Least Expensive Hybrid Cars to Save the Planet With

The 10 Biggest ‘Gate’ Controversies in History

The 10 States with the Highest Nursing Shortages Leaving Their Hospitals Depleted

The 10 Best Value Investment Blogs that Every Investor Must Read

The 6 Cheapest Boarding Schools in Europe 2015

The 5 Most Expensive Cars To Insure in the World

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!