Maurice Greenberg, the former chairman of American International Group Inc., says the company executives who recently received retention bonuses do not deserve the cash.
The AIG Financial Products Corp. executives responsible for the units should receive the money, Greenberg said Tuesday on PBS, on “The Charlie Rose Show.”
At AIG, there was an agreement that the parent company would put up some of the money to be invested and AIG Financial Products would put up the rest, Greenberg said.
It is unfathomable how, after AIG Financial Products lost money, AIG should be paying the executives anything, Greenberg said.
“Why would you then give them a bonus to make up for what they lost?” asked Greenberg. “Where is the equality of that?”
He said there is no reason to provide an incentive to retain the executives, because they have nowhere to go. If the executives did leave. they “could have been replaced very quickly.”
Greenberg, who was forced out of his job in 2005 over an accounting scandal but retains a large stake in AIG, said that after AIG lost its AAA rating it should have stopped trading in credit default swaps.
If the company had done so it would be fine today, Greenberg said.
The problem at AIG is not that it is losing money, but that it is having to put up so much collateral to back credit default swaps, Greenberg said.
Greenberg was critical of the need to pour so much money into AIG, saying that other forms of support could be used, including government guarantees.
Greenberg said the government should be concentrating on rebuilding the company and extending the loan period to allow for the rebuilding. Liquidating the company makes no sense, because the sale of the assets would have to be done at bargain basement prices, he said.
“What have you achieved [by breaking up AIG]?” Greenberg asked. “You’ve taken the greatest insurance company in the history of this country and destroyed it.”
On the current global economic crisis, Greenberg observed, “We have not confronted what we are living with now in our lifetime.”
He added that it is difficult to predict when this might end, calling any timeline “speculation.” With obtaining credit still difficult and consumers not spending, the public will be much more conservative than in the past, he predicted.
“It will be a lifetime before people will feel comfortable again,” Greenberg said. “We are on new ground.”