NU Online News Service, April 27, 3:25 p.m.EDT

WASHINGTON–American International Group Chief ExecutiveOfficer Edward Liddy has been asked to testify before a Houseoversight committee May 6 on what caused the downfall of AIG.

An AIG spokesman said today she would check into the status ofthe invitation.

The request was made by Rep. Edolphus Towns, D-N.Y., chairman ofthe House Oversight and Government Reform Committee.

In an April 22 letter, Rep. Towns also asked Mr. Liddy totestify as to whether federal financial assistance was the only"thing that could save the company" and what AIG has done with itsbillions in federal financial assistance.

Mr. Towns also told Mr. Liddy to be prepared to answer whetherAIG will need federal financial assistance beyond that alreadyannounced and what is AIG doing to stabilize the company.

The government took control of 79.9 percent of AIG on Sept. 16,2008 in exchange for an aid package of up to $85 billion, a packagethat has since been revised three times.

According to AIG and government data, the company currently owesthe government $80 billion–$40 billion in capital drawn from theTroubled Asset Relief Program and $40 billion drawn from a $60billion Fed-funded credit facility.

The Government Accountability Office estimates the governmentinvolvement in AIG at $173 billion, but according to AIG officials,that includes its estimate of the government's total investments inAIG.

Rep. Towns also asked that Mr. Liddy be prepared to testify asto the solvency of AIG's insurance operations and how this kind ofdisaster can be prevented in the future.

The session with Mr. Liddy would be the second time the panelhas called witnesses about AIG. On April 2, the committee heardfrom Maurice Greenberg, the former AIG CEO and chairman who wasforced out during an accounting scandal at the company.

Mr. Greenberg said that after he left, the successor management,including Mr. Liddy, failed to pay attention to the AIG FinancialProducts unit that put the company deeply in the red. There was no"control and management oversight at AIGFP," he said.

He also told the committee that the government plan to bail outAIG has failed, and that selling the company at this time "wouldbring the government only pennies on the dollar for theirinvestment in AIG."

It would have been cheaper, Mr. Greenberg said, for thegovernment if it had walled off AIG Financial Products "andprovided guarantees to AIGFP's counterparties, rather than puttingup billions of dollars in cash collateral to thosecounterparties."

"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."