WASHINGTON–Former American International Group chairman and CEO Maurice “Hank” Greenberg said yesterday the company's renegotiated government bailout should help AIG efforts to sell off assets.

Mr. Greenberg made his comments in an appearance via video before the annual conference of the Captive Insurance Council of the District of Columbia.

Under its prior loan arrangement, AIG would have had to repay the government by selling assets within two years, and would have had to pay 14.5 interest on the loan annually.

That agreement was replaced yesterday by a deal under which the Treasury is purchasing $40 billion of AIG preferred shares under the Troubled Asset Relief Program.

Amongst other provisions, the Federal Reserve will reduce its credit facility to $60 billion from $85 billion, reducing the cost burden on AIG.

The loan interest rates have also been reduced by 5.5 percent, and the length is being extended to five years from two. The government retains a 79.9 percent interest in the company.

Mr. Greenberg said the new loan arrangements were much better, because the prior deal was made under “terms that were strangling the company.”

Mr. Greenberg, currently chairman and CEO of C.V. Starr, had been lobbying AIG's senior management for weeks to renegotiate the terms of the government's original $85 billion bailout loan to charge less onerous interest rates and extend the term to allow for a more orderly sale of assets.

He previously controlled approximately 11 percent of the AIG conglomerate's stock through a personal stake, several foundations, C.V. Starr and other companies that he controls, but in a September filing with the Securities and Exchange Commission he said he would be selling shares “for liquidity and other purposes” and the sales could materially decrease his stock ownership.

He said yesterday it was “very clear that the first [AIG loan] program was going to fail” because the interest rate was too high, totaling about $27 billion for the two years of the loan, a level “no firm was going to be able to withstand.”

One of the problems AIG is now facing “is that AIG is in a position where they're expected to sell assets to repay the taxpayers, but they can't sell anything in this market,” said Mr. Greenberg.

He explained that “you can't sell subsidiaries in this market because cash is very scarce,” and because anything that could be sold would go at “garage sale prices.”

But, he said, the federal program, as reconstructed, “should buy AIG some time.”

Going forward, he said, “sometime after about three years,” AIG should be able to get a fair value for subsidiaries.

However, he noted that as majority owner the Fed controls things and “the Federal Reserve will decide what to sell.”

In other remarks, he continued to deny any role in AIG's financial meltdown and said that “AIG had a liquidity problem, not a solvency problem.”

Mr. Greenberg said the distressed conglomerate's problems began after he was forced out of the firm in 2005 and the company “went wild.”

After being downgraded by rating services, Mr. Greenberg said AIG “just ran out of cash” for collateral on its credit default swaps whose declining value forced the government to bail out the company Sept. 17 with an $85 billion bridge loan followed by further credit arrangements.

He spoke from his home in New York via videoconference because, he said he wanted to be sure he was around for AIG's third-quarter report that yesterday listed more than $24 billion in losses since it was bailed out by the government.

The company reported its financials yesterday just hours after the Federal Reserve Board and the Treasury Department agreed to the changes that eased the terms of the AIG bailout.

“Things are changing very rapidly,” he said. “I thought I'd better stay.”

Mr. Greenberg left AIG in 2005 amidst a probe by then New York Attorney General Eliot Spitzer into accounting fraud and bid-rigging, and was replaced by Martin Sullivan.

Mr. Sullivan was replaced by Robert Willumstad, followed by Edward Liddy, who was appointed CEO after the government as a condition of the $85 billion loan obtained a 79.9 percent interest the company.

Mr. Greenberg said, “They essentially nationalized the company.”

In his view, he said aside from the company's difficulties caused by credit default swaps, AIG had some problems with its securities lending outfit, which was given cash collateral in exchange for lending out securities. AIG, he said, invested that cash collateral and lost it, leading to more of a cash crunch when the borrowers returned the securities and asked for their cash collateral back.

The company, Mr. Greenberg said, acted “greedy and foolish and in an unnecessary fashion, and whatever else you want to call it.” He added, “They kept running out of cash.”

He said the property-casualty market has suffered somewhat as “pricing has not stiffened in property and casualty” and that he had heard rumors that AIG was cutting rates to maintain market share. “That's the wrong thing to do, but sometimes desperate people do desperate things,” he said.

Mr. Greenberg said his concerns about AIG were not about him.

“My concern is and always has been about the thousands of employees who've lost their life savings,” he said. “When I left the company, they had a market value of $170 billion,” which he said is now down to about $5 billion.

The New York state employees' pension system alone, Mr. Greenberg said, had lost $1.2 billion or $1.3 billion with the decline in AIG stock values.

He said he would “try to do anything I can to help in any way I can, but there's a limit to what I can do here.”

He put a lot of blame on the various directors at AIG, who he said “were not minding the store.”

“What were they doing all this time?” he asked. He said he had formed an audit committee, and others as well, “more committees than I can count.”

“What was management doing? I'm angry, obviously I'm angry.”

Mr. Greenberg also criticized former New York Attorney General and Governor Spitzer, although not by name.

Some AIG problems, he said, werecaused “by an aggressive attorney general who was seeking to become governor and who tried to take down the biggest names he could find.”

Mr. Greenberg added, “A lot needs to be looked at in our justice system, or 'injustice system.'”

He also talked a bit about captive insurers, the subject of the conference, and said they are having problems with companies not wanting to front them anymore.

“This is not going to go away overnight,” Mr. Greenberg said. “We're not going to work our way out of this in 20 minutes; it's going to be very painful.