In the fall of 2004 I interviewed for a position with American Financial Group. Here is what Mr. Greenberg has to say about AFG at the time and what the MSNBC article has to say about their business:
“AIG’s business model did not fail; its management did,” Greenberg said. He went on to criticize their handling of the financial products division, which he said “functioned quite well” under his leadership.
That division wrote the notorious credit-default swaps that have forced the company to pay more than $50 billion to U.S. and foreign banks.
AFG was the division now blamed for the catastrophic losses and near failure of the company that led to the huge government bailouts. According to Mr.Greenberg all was well in March, 2005 when he left and all the problems came later. Funny, that isn't what I remember.
The AFG position required me to move to Cincinnati, something I had doubts about doing particularly for a contract position. The job was a 90 day contract-to-hire position and the interviewers did all they could to reassure me that the permanent position was mine so long as I did a good job for them. I was repeatedly told that AIG has never had any layoffs during the company's 176 year history. That was a major selling point and it helped crystallize my decision to join AFG.
Fast forward three months after I moved to Cincinnati and started on the job. My manager informed me that my contract was going to be extended. Bringing me on board permanently was delayed, I was told, by internal politics. They wanted to keep me as a contractor until the issues could be resolved and then I could be hired permanently. I had all the normal benefits including health insurance through the consulting firm I was working for so I had no problem with this and I continued as a contractor.
In March, 2005, the same month Mr. Greenberg left AIG, the first layoffs in the company's history were announced. There were reports of financial troubles and losses even then. Someone from another group which was being closed, an AIG employee, was going to fill my spot as a Linux/UNIX Systems Administrator. I was told I would not be hired after all. This was after I had moved to and lived in Cincinnati for five months. The consulting firm I was working for placed me with Red Hat so things worked out OK for me, but... AIG was strong and profitable in March, 2005 according to Mr. Greenberg. If so, why the layoffs? Why the reported losses and financial problems at the time?
Rep. Elijah Cummings (D-MD) has his own doubts about Mr. Greenberg's testimony:
"I'm convinced that the systemic problems at AIG go far deeper than mistakes made in the four years since you left the company," Cummings said. "What you failed to mention was that a good portion of those risky (bets) were written" before Greenberg's 2005 departure.
Cummings asked multiple times how many of the credit-default swaps were written while Greenberg was in charge.
"The amount we wrote was for European banks," Greenberg replied. "As far as I know, there was never a loss on any of that."
Hmmm... I certainly had no access to AFG's books or to the particulars about the financial problems that raised alarm bells and forced layoffs in March, 2005 so I can't say if Mr. Greenberg was truthful in his response or not. I, like Rep. Cummings, have my doubts. "As far as I know..." is a hole you can drive a Mack truck through. Those are the kind of weasel words that guarantee that Mr. Greenberg isn't lying or perjuring himself even if his account isn't exactly accurate.
As I've already noted I have and had no access to the company's finances now or then. I do know for a fact that things weren't nearly as rosy as the picture that Mr. Greenberg paints.