AIG II - Maurice Greenberg is Back

If we screw up and get fired that becomes part of our permanent employment record. But if you are part of the financial oligarchy, well, they can practically destroy the entire financial system and get multiple do-overs. Several examples come to mind:

1) John Meriweather - founder of Long-Term Capital Management who after practically destroying the financial system with his high flying computer models went on to start several other hedge funds. and

2) Maurice "Hank" Greenberg - founder and former Chairman and CEO of AIG.

Is'nt American Capitalism just grand?

Yeap. Maurice Greenberg is back and unfortunately he maybe benefiting from taxpayer's bailout of AIG:

Even as he has been lambasting the government for its handling of A.I.G. after its near collapse, Mr. Greenberg has been quietly building up a family of insurance companies that could compete with A.I.G. To fill the ranks of his venture, C.V. Starr & Company, he has been hiring some people he once employed.

Now, Mr. Greenberg may have received some unintended assistance from the United States Treasury. Just last week, the Treasury severely limited pay at A.I.G. and other companies that were bailed out by taxpayers. That may hasten the exodus of A.I.G.’s talent, sending more refugees into Mr. Greenberg’s arms, since C. V. Starr is free to pay whatever it wants.

How is this guy allowed to operate any type of insurance company?

In 2005, Mr. Greenberg was the subject of a huge fraud probe by Eliot Spitzer, when he was New York Attorney General. Greenberg was forced to resign. But he still controlled a labyrinth of companies including C.V. Starr. Oh, BTW, he was cleared of any criminal and civil charges in the fraud probe (yeah right).

This past summer he won the rights to $4.3 billion in AIG stock the he had removed in an "unusual" offshore retirement plan. Nice.

"You can't teach an old dog new tricks." This C.V Starr has the makings of another AIG all over again:

Little is known about its business plan, although it has been announcing ventures to insure things as diverse as wayward corporate directors and construction accidents on the bridges and roads being built under the Obama administration’s fiscal stimulus program.

The firm seems to be focusing on the specialized lines of business insurance that once made A.I.G. stand out. The government had hoped to leave those businesses at A.I.G. intact after selling off most of its other operations, like life insurance and household finance.

C. V. Starr is also taking on the same form as A.I.G. — an intricate group of companies, each with its own line of business.

For now, most of those companies do not sell their own insurance, but operate as general agencies, representing insurers from rival groups on products that C. V. Starr does not yet sell.

That way, if C. V. Starr does not yet profit from the underwriting of a line of insurance, it can still receive commission income by selling it. “That’s the beauty of how he structures the company,” Mr. Barile said. “Everything is in such silos that every time you make a transaction, the outside world thinks you’re competing, but you aren’t.”

This C.V. Starr company is also very controversial:

An action by the Teachers' Retirement System of Louisiana says key AIG executives who held virtually identical jobs at C.V. Starr brokered hundreds of millions of dollars in insurance for AIG while acting as executives of the private firm, thus diverting millions of dollars in commissions to themselves.

"Those executives became beholden to Hank Greenberg. Therefore, he had the power to make them do things that ethical people don't normally want to do," says attorney Louis Gottlieb, who represents the Ohio Public Employees Retirement System and other state funds in related complaint

Greenberg claims he did not cause the risky trading that brought down AIG. But I guess I missed the part where Greenberg was Chairman and CEO of AIG and benefited greatly from the high flying trading of the AIG's Financial Products Unit (AIGFP). AIGFP was started in 1987.

How does a person with such questionable background get a license to sell insurance in this country?

Better yet. Instead of wasting time investigating ACORN maybe congress should investigate AIG, C.V. Starr and Greenberg more thoroughly.

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More on that Louisiana Teachers' Pension lawsuit

The case was settled:

The Teachers Retirement System of Louisiana [official website] on Thursday settled a shareholder suit against a group of former executives from American International Group (AIG) [corporate website], including AIG ex-CEO and chairman Maurice "Hank" Greenberg. The lawsuit, filed in 2002 in the Delaware Chancery Court, concerned improper transfers of approximately $1 billion from AIG to C.V. Starr & Co. [corporate website]. The former AIG executives, including Greenberg, were officers of C.V. Starr, an insurance company closely related to AIG, and received compensation from Starr in addition to their AIG salaries. The parties reportedly settled the lawsuit for $115 million, with $29.5 million to be paid by the defendants themselves, and a directors' and officers' insurance policy paying the remainder.

This Greenberg guy is bad stuff. Is there any way we can force him to go operate somewhere else so that we don't have to bailout another one of his companies?

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Double dipping

Greenberg has his huge ownership stake in AIG preserved by bailout and now benefits from raiding AIG to build his company.

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