Towns Details Meet With Greenberg, Golub On AIG 'Fire Sales'

NU Online News Service, Sept. 22, 4:20 p.m. EDT

An influential member of Congress, who is working to help make sure American International Group repays its government loans, said the company had previously been using a "fire sale" mentality to pay off its debts, but that might have changed with a new chief executive in place.

That comment was reported by a spokesman for Rep. Edolphus Towns, D-N.Y., chair of the House Oversight and Government Reform Committee, which has been examining the government bailout of the company.

The spokesman said the congressman's remarks came in a meeting with Harvey Golub, current chair of AIG, and former AIG chair and chief executive officer, Maurice Greenberg, who had previously complained about "fire sales" at the company, in which he still retains a large stock interest.

Rep. Towns' committee had called Mr. Greenberg–now chair and CEO of C.V. Starr–to testify on April 2. He told the committee the government bailout plan was a failure, and that "a successful liquidation is impossible in the present economic climate since buyers for AIG assets at fair prices simply do not exist at this time. Fire-sale prices will bring taxpayers, who now own almost 80 percent of AIG, only pennies on the dollar for their investment in AIG."

Rep. Towns, according to his spokesman, said he met last week with Mr. Greenberg and Mr. Golub.

Regarding his talk with Mr. Golub, Rep. Towns said that the change in CEO to Robert Benmoshe from Edward Liddy seems to be a positive, in that the new CEO does not buy into the fire-sale mentality of the recent past.

Regarding his meeting with Mr. Greenberg, Rep. Towns said Mr. Greenberg suggested that a change in the terms of the government payback agreement with AIG might help improve the chances of AIG repaying its government loans, and he has asked his staff to look into the issue.

Officials from the Treasury and the Board of Governors of the Federal Reserve System declined comment.