Greenberg blames accounting rules in testimony, according to reports
Hank Greenberg, the former chief executive of AIG, has defended the insurer's risk management but admitted that looser accounting and curbs to market short-selling could have saved it, reports washingtonpost.com.
Greenberg wrote in testimony to a congressional panel today that changes to so-called fair value accounting and rules governing investors who make bets that a stock will fall could have mitigated AIG's liquidity problems, states the report.
Greenberg was scheduled to appear at a Congress hearing today examining the chain of events that led to the government's $700 billion bailout of the financial industry, but pulled out due to illness.
He was due to join former AIG chief executives Robert Willumstad and Martin Sullivan, who are testifying to the US Congress about the events that forced the government to nationalise the insurer.
The Financial Times earlier reported that Congress will hear that the complexity and international spread of AIG’s operations stopped regulatory oversight of the derivatives unit that helped bring down the insurer.
The unit was based in London but regulated in the US. French watchdogs oversaw a small bank it owned in the country.
The report said that the difficulties were compounded by the fact that AIGFP dealt in credit default swaps and other unregulated derivatives.
In the US, the Office of Thrift Supervision had responsibility for AIG’s holding company since 1999 because AIG owned a US-based lender.
