Atlas Insurance Group

AIG may be the conduit for tens of billions of taxpayer dollars paid out to banks and other counter-parties. Despite this, it is a black box from which little information has emanated. AIG's silence - and that of its protectors in the government - has spoken volumes about the propriety of what has been going on there. One who has not been silent is former AIG honcho Hank Greenberg who has not been shy about explaining, in plain terms, what happened there and what is going wrong now. See his appearance on "Charlie Rose" for the best possible explanation of AIG's woes you are likely to find.

Now, Greenberg has been summoned to Capital Hill to testify about AIG, his role in AIG, and his perspective on the bailout. Unlike the obfuscatory Edward M. Liddy, Greenberg faced his questioners with his head held high, and spoke bluntly and truthfully: AIG Rescue Has Failed, Greenberg Tells Lawmakers

Maurice "Hank" Greenberg, who headed the company for 38 years until his departure under pressure in 2005, said that taxpayers are losing money on their investment in the firm. Instead of liquidating the firm and selling off its assets, he told a U.S. House committee in prepared remarks, that the government should reduce its investment in the firm and replace it with government guarantees.

The current management and board of directors should also be replaced, Mr.Greenberg said. "My approach focuses on reconstructing and sustaining AIG so that it will in the future be a healthy and vibrant company once again," Mr. Greenberg said in his testimony before the House Oversight and Government Reform committee.

While everyone else who matters wants to keep the AIG money feedback loop to continue cycling $$ through the banking world, Greenberg actually wants to restore AIG to financial health. Geez! That's so 20th Century!

Mr. Greenberg said the government should reduce its stake in AIG to 15% from 80%in order to attract private capital. Additionally, Mr. Greenberg said billions in government funds shouldn't have been paid to AIG's counterparties; giving other financial firms guarantees would've been a better option.

"These cash payments to [credit-default swap counterparties should never have occurred," Mr. Greenberg said. "It would have been more beneficial for the American taxpayer if the federal government had walled off AIG Financial Products…and provided guarantees to AIGFP'scounterparties rather than putting up billions of dollars in cash collateral to those counterparties."

Now, how is it that this kind of practical problem solving has been lacking from the Indispensable Men in the Bush-Obama Treasury Departments? Perhaps because they have been focused, not on preventing a "systemic meltdown," but instead protecting the fraudulent underwriting at AIG and the speculative bets that sought to take advantage of that.

Of course, thanks to Elliot Spitzer, Greenberg is a problematic wtiness because he had to resign under a cloud. But, that is beginning to look like a boardroom coup enabled by the sort of prosecutorial over-reach that we have just seen play out in the Ted Stevens case. Funny how that worked out.

In a statement, AIG said that when Mr. Greenberg left in March 2005, the unit had already sold about half of the swaps that caused the biggest problems. AIG added that AIG's exposure under the contracts wasn't hedged.

Mr. Greenbergsaid the amount of exposure AIG faced under the contracts when he left was beside the point. When AIG lost its triple-A credit rating, which came afterhis departure as CEO, he would have hedged the exposure and tried to modify the collateral requirements, he said in the interview.

Yeah, Greenberg seems to be the only person around who wants to talk about AIG's problems beginning with the loss of its AAA rating, which led to collateral calls on it. After the Death of Wall Street in September those calls became a cascade, leading to the bail out. Most of those who received AIG $$ never lost a dime and have received 100% of their contracted payments. Isn't it odd that, with all the talk of sacrifice in the air, that these contracts continue to be honored - no questions asked. Are you feeling ripped off yet?