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October 27, 2009


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This and the previous post bother me. Hank Greenberg paid $15 million to settle a claim brought by the Securities & Exchange Commission that he participated in covering up AIG's losses. For example, he was involved in using an offshore shell corporation to make it appear that operating losses in AIG's auto warranty insurance business were capital losses, which the stock market minds less, since they are seen as a one-time affair. David Brooks can talk about "rebalancing" relations between management and shareholders, but Greenberg was lying to those shareholders and keeping AIG's stock price higher than the truth warranted. In the stock market, economic risk and enterprise risk are all to the good, but the risk that you are being lied to is unacceptable and rightly against the law.

What has Greenberg built in his career that compares with a great railroad, a drug company that develops useful medicines, Google? Under his reign, AIG went heavily into writing credit default swaps, which ended by bankrupting the company and costing the taxpayers a great deal of money.

While one can admire his energy at 84, I wonder if Greenberg has any idea how to use it for productive ends.

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