Former American International Group Chief Executive OfficerMaurice Greenberg arrived on Capitol Hill last week to tell a Housepanel how the government should fix AIG, but heard a congressmancall him the wrong witness because of his own legal problems.

Mr. Greenberg left the conglomerate he headed for nearly 40years in 2005, when the company was in the midst of an accountingscandal.

Testifying before the House Committee on Oversight andGovernment Reform, Mr. Greenberg said the government plan to bailout AIG has failed, and that selling the company at this time"would bring the government only pennies on the dollar for theirinvestment in AIG."

Rep. Darrell Issa, R-Calif., the ranking minority member of thepanel, criticized the appearance of Mr. Greenberg as a witness,saying he was "troubled" that Mr. Greenberg was the only witness atthe hearing.

The congressman saidMr. Greenberg brought with him a "dark cloud which the majority, inits briefing memo, dismisses as 'not the subject of thishearing.'"

Rep. Issa also said he was worried that by having Mr. Greenberggive his opinions on why the AIG bailout strategy should bechanged, "the committee is growing out of touch with thecontemporary bailout issues."

He explained that the committee should be talking to the currentAIG chairman and CEO, Edward Liddy, as well as officials at theTreasury Department, the Federal Reserve, and the Securities andExchange Commission.

He said Mr. Greenberg "has been a recurring figure in criminaland civil investigations by the Department of Justice and the SEC,"and added that news reports indicate SEC action against Mr.Greenberg on securities fraud charges "could come at any day."

There are good reasons to believe Mr. Greenberg could face evenmore significant legal problems, Rep. Issa said.

Under questioning later by Rep. Issa, Mr. Greenberg's lawyer,David Boies, confirmed that Mr. Greenberg had received a WellsNotice from the SEC indicating he could be the target for legalaction. Mr. Greenberg was notified in May of 2008.

The notice, he said, did not deal with the accounting fraud casetried last year in U.S. District Court in Hartford, Conn., whereMr. Greenberg was mentioned as an unindicted co-conspirator. Thatproceeding led to the conviction of four former executives ofGeneral Reinsurance and a former AIG executive for a fraud thatdeceived AIG investors through a sham reinsurance transaction in2000.

Rep. Edolphus Towns, D-N.Y., chair of the Housed committee,defended his decision to start his investigation into AIG, sayinghe didn't want to interfere with current investigations by otheragencies.

He added that the hearing will be only the first concerning AIGand that Mr. Liddy will testify soon. "There will be acomprehensive review of the AIG problem," he said.

In his testimony, Mr. Greenberg said it would have been cheaperfor the government if it had walled off AIG Financial Products, thetroubled unit of the company, "and provided guarantees to AIGFP'scounterparties, rather than putting up billions of dollars in cashcollateral to those counterparties."

"Guarantees would have sufficed," Mr. Greenberg said.

He said AIG's problem was a liquidity problem, not a solvencyproblem. In such circumstances, Mr. Greenberg said, "the goal ofgovernment should be to provide temporary liquidity to save jobsand keep the gears of the financial situation operatingsmoothly."

The former AIG head said the goal of government "should not beto liquidate large companies that have demonstrated that they cansucceed if properly managed. It should be to restore them so thatthey can be employers and taxpayers."

He called the failure "a management problem" under questioningfrom Rep. Towns.

His approach, Mr. Greenberg explained, would be to abandon theliquidation approach and "focus instead on rebuilding AIG so thatit is better positioned to pay back the taxpayer."

He defended his management of the company, but said that afterhe was forced out, "my successor [Martin Sullivan] didn't payattention to the problems [at AIGFP]."

And, he added, after Mr. Sullivan left, "the new managementdidn't pay much attention either." Mr. Greenberg said after his owndeparture, there was no "control and management oversight atAIGFP."

The company's problems developed then, in Mr. Greenberg's view,because it lost its "triple-A" status with financial rating firms."When they lost the 'triple-A' rating, they should have slowed thewriting of credit default swaps [at AIGFP]. They should have calleda halt," he said.

In response to a question from Rep. Elijah Cummings, D-Md., whohas led the outcry against retention bonuses that AIG has paid toexecutives of AIGFP, Mr. Greenberg said, "I don't acceptresponsibility for AIG's problems."