Greenberg demands answers of AIG’s Liddy

Maurice “Hank” Greenberg, former chief executive of AIG, is asking questions about a new financial entity the insurer established with regulators to purchase $70 billion of exposure to collateralized debt obligations.
Specifically, Mr. Greenberg asked Edward M. Liddy, current CEO of American International Group Inc. in New York, where the insurer got $35 billion of cash collateral to buy up $70 billion in credit default swaps that were protecting the portfolio of multisector CDOs.
He also wants to know the identity of the CDS counterparties and whether the $35 billion of cash collateral has already been paid out to them.
A copy of the letter was filed with the Securities and Exchange Commission yesterday.
The questions center on a limited liability company that the insurer was supposed to establish with the New York Federal Reserve Board to purchase the CDO exposures covered by AIG Financial Products’ multisector CDS portfolio.
The proposed establishment of the vehicle was announced on Nov. 10 — the same day the insurer announced that it had cooperated with the U.S. Treasury and the Federal Reserve to create a capital solution to address its CDS portfolios and securities lending program.
Mr. Greenberg also asked how much of the $38 billion New York Fed lending facility has been drawn by the insurer, and how much of that drawn amount has been paid to securities lending counterparties.
“Investors in AIG securities need to know the answers to these questions and U.S. taxpayers should know how their tax dollars have been used,” he wrote.

Related Topics: American International Group (AIG)