Matt Taibbi Eviscerates Former AIG CEO Hank Greenberg For Bringing A Suit Against The Government
Naturally, he's outraged about the whole mess, and he's directing that outrage at the insurance company's former CEO, Hank Greenberg.
It makes sense. Greenberg is the man who filed the initial suit on behalf of AIG shareholders alleging that the U.S. government handled the company's bailout in a manner that was contrary to their interests. That argument was dismissed in a NYC Court, but the case was allowed to proceed in Washington D.C.
That's where AIG's board could join in, if they so choose, after hearing arguments for and against the suit at a meeting today.
Now here's Taibbi's take:
But here's the funny thing about the lawsuit filed against the government: It isn't all wrong. In fact, parts of it are quite on the mark.
The only problem is, the suit is being filed by maybe the biggest douchebag of all time, Hank Greenberg (and his company, Starr International), a man who has not only been proven to be corrupt and a fraud, but who perhaps more than anyone else was responsible for the galactic balance-sheet goat-f*ck that caused AIG's implosion in the first place. If there is such a person as an innocent AIG shareholder who was harmed by the government's conduct, it sure as hell isn't Hank Greenberg.
Business Insider also pointed out that, during his tenure as CEO, Greenberg oversaw the creation of the unit that made the risky bets that brought the company to the brink of collapse. Taibbi goes into the gory details of all that:
Well, AIG, under Greenberg's watch, had entered into hundreds of billions of dollars of cosmically stupid credit default swap bets with all of the biggest banks in the world, essentially taking book for all of Wall Street, in many cases taking the wrong side of bets against the mortgage markets, among other things. Greenberg was dumb enough to allow his subordinate Joe Cassano to enter into these contracts, which were written in such a way that if AIG's credit rating were ever to fall, AIG would suddenly owe its customers billions in cash collateral.
When the ratings agencies started downgrading AIG because of anxiety over all of the investigations into the company's accounting, all of those collateral calls started coming due. Before you knew it, companies like Goldman were demanding more cash in collateral than AIG had, and when the company was finally bled dry, that's when the bailout took place.
All that said, Taibbi does grant Greenberg one little piece of satisfaction. He writes that the powers-that-be on Wall Street "absolutely did conspire to seize AIG and then use a monstrous mixture of AIG's assets and public money to keep themselves alive."
In essence, AIG was the helpless fat guy in the lifeboat who got eaten when the rest of the survivors ran out of food.
In a vacuum, perhaps, there might be some sort of claim here, and there are ordinary people who worked for AIG who were probably harmed when the state decided not to force companies like Goldman to take even a 1 percent haircut on their CDS contracts with the firm. But Hank Greenberg, the guy who started all of this mess by monkeying with shady reinsurance deals and signing off on the bank's incredibly irresponsible bookmaking during the pre-crisis years, is not the guy to bring that claim.
So in short, down with Hank, and also, down with Wall Street. Got it.