AIG's Liddy talks to lawmakers
American International Group (AIG) CEO Edward Liddy is speaking before the House Oversight and Government Reform Committee today, discussing the company's status. According to reports, Liddy told the group that the company has reduced, but not eliminated, the risk its failure could pose to the general global economy.
During these discussions, Liddy told the committee that the firm has a "substantial real-estate portfolio," adding that losses in the commercial real-estate market led to the company's large fourth-quarter loss. Liddy continued to state that further economic disruption is "reason to worry" and that he is "worried about that portfolio."
However, Liddy told the committee that the company will fully repay the American taxpayer, "if the marketplace holds the way it is right now." Liddy added that "it will take somewhere between three to five years," but it could take longer if economic conditions worsen. The repayment is "heavily dependent on what happens with the worldwide economic situation."
So, the program is called Project Destiny (seriously) and will be partially revealed to the House Oversight and Government Reform Committee. Liddy said that some details are sensitive and could damage AIG's ability to sell assets, but he told Rep. Edolphus Towns (D - NY) that the company will "work with you to provide everything that we possibly can."
Perhaps the most interesting part of the day's proceedings was when Towns questioned the business strategy of selling off assets in a price-depreciated bear market. I call this part interesting because it is a politician actually using common sense when questioning an executive of one of the companies responsible for the public outrage and the scorn aimed at them. I just wonder where this sort of common sense was back when the New York Fed (minus Timothy Geithner, of course) knew all about what was transpiring at AIG.
Unfortunately, it has taken far too long for the process to come to this point. Hopefully Liddy and AIG will learn the error of their ways. For them, I am actually optimistic. For the rest of the financial world, I'm not as hopeful. There is a reason we are in this mess, and it is their fault. Can financial firms lead us out of the economic doldrums? Possibly, but what if they do? Will future AIGs learn from the current AIG? I'm not so sure, and the old adage states that those who do not learn from history are doomed to repeat it. Let's hope there is a lot of learnin' going on and not much repeatin' down the road.