AIG’s (NYSE:AIG) Greenberg’s book Laughs at U.S. Taxpayers

Northern, WI 1/29/2013 (wallstreetpr) – American International Group Inc. (NYSE:AIG) was a recipient of government largesse during the financial crisis, where it received $182 billion dollars of US taxpayers’ money. But what has now been observed is that this bailout did not make any significant difference.

Maurice “Hank” Greenberg, the former chief executive in his book titled, “The AIG Story” believes tat the company survived only due to resolve and loyalty of its employees.  Earlier too, the company had insulted the tax payers, when Greenberg had sued US government asking for $25 billion damages for the allegation that US government had illegitimately seized shares of AIG (NYSE:AIG) in 2008. He had a big interest in the stock as he was a major shareholder. Greenberg tried to force AIG (NYSE:AIG) to participate in the suit, but then the company’s board of directors declined to join in.

In March 2005, Greenberg was fired from AIG (NYSE:AIG)  in light of the regulatory probes he and his company faced. His book reiterates the same thing that he was saying from the time of meltdown. A smart businessman and a cautious risk-taker, he became a fatality of overzealous regulators as well as unappreciative former colleagues. Since he was thrown out from AIG(NYSE:AIG) , the company ran into rough weather.

He was very intelligent business leader who, by the way of takeovers and with a capacity to detect opportunities which his rivals didn’t, turned AIG (NYSE:AIG) into the world’s largest insurance company. Now after a top notch career involving making friends with heads of state and turning AIG (NYSE:AIG) into a global giant, this 87 year old man should have productive insights into the collapse of the world economy and some introspection on the lessons he learnt. But in this book, he simply goes in blame game and back patting.

Ex New York State AG Eliot Spitzer is a man with huge ambition who initiated AIG’s (NYSE:AIG) near- collapse, Greenberg says. The Enron scandal was responsible for law-enforcement authorities to taking closer look at the workings of public companies. The steps to better corporate governance saw AIG (NYSE:AIG) being forced to take on board the members who had the guts to challenge the insiders and break the board’s unity. But the author considers himself as smart, independent and revolutionary. His Chairman’s note mentions he is a very buy person.

After he was thrown out, Greenberg ended in nasty legal case with AIG(NYSE:AIG), and large part of the book tries to prove that the company’s new management wronged him and took risks he would have disapproved of. AIG’s (NYSE:AIG) Financial Products (FP) associate designed the derivatives that led to the company’s collapse. The book says, after Greenberg’s departure, the FP took on more risks without adequate safety net.

whether AIG’s (NYSE:AIG) derivatives operation would ever succeed is doubtful. When Greenberg was pitched the idea of establishing a derivatives business, he spoke to Dean Phypers, AIG’s (NYSE:AIG) director with specialized expertise in financial instruments. Phypers thought the idea was novel, but complicated and confusing. However he gave the operation a go-ahead, provided it was strictly controlled.

While the derivatives business was not Greenberg’s fault, he also has to share the blame for setting it up, as that was the cause of the company’s destruction.

The shares of AIG (NYSE:AIG) went up by 1.63% to close at $37.30

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Published by Benjamin Roussey

Benjamin Roussey is from Sacramento, California. He has two master’s degrees and served four years in the U.S. Navy. His bachelor’s degree is from CSUS (1999) where he was on a baseball pitching scholarship. His second master’s degree is an MBA in Global Management from the University of Phoenix (2006). He has worked for small businesses, public agencies, and large corporations. He has lived in Korea and Saudi Arabia where he was an ESL instructor. Benjamin spends his time in between Northern California and Cabo San Lucas, Mexico, committing himself to his craft of freelance and website writing.