Baked by Richard
The ex-CEOs themselves blamed accounting rules and market conditions for the problems that led to the crisis. But Waxman put the blame for AIG's troubles squarely on its past and present leaders, comparing them to the former Lehman chief executive Richard Fuld, who testified Monday about the investment bank's bankruptcy.
And in each case, their executives are walking away with millions of dollars while taxpayers are stuck with billions of dollars in costs. They are losing their jobs, their homes, and their health insurance," said Waxman. Willumstad replied that he was unaware of the retreat and that it "seems very inappropriate.
Regis retreat had been "completely mischaracterized. Willumstad, who was CEO from June through the September action by the Federal Reserve, said "mark to market" accounting rules - which require companies to value securities at current prices in distressed situations - forced financial institutions to book billions of dollars in losses for securities that were not in default.
He said those losses led to a spiral that included debt rating downgrades. Sullivan, who was CEO from March until June, said the accounting rules were key among several factors leading to AIG's problems, saying they had "unintended consequences for financial institutions when markets seize up.
In a letter written at the time, Willumstad said he did not have the time to launch his restructuring plan and that he preferred "not to receive severance payments while shareholders and employees have lost considerable value in their AIG shares.
In his written testimony, Greenberg said he was blameless because he was out the door more than three years before the company's takeover. But reports indicate that the risk controls my team and I put in place were weakened or eliminated after my retirement.
Tuesday's hearing was the second by the House Oversight panel to examine what went wrong with the economy. It focused specifically on the Fed's decision to bail out AIG over concerns that its failure would cause widespread damage to the economy, while allowing Lehman to fail.
He described the insurance part of AIG's business as sound. The first hearing, on Monday, grilled Fuld about why his company went under. But Fuld blamed a "crisis of confidence" that had swept through the financial markets.Oct 07, · "This (bailout) was a direct result of the mistakes made by Mr.
Cassano," Waxman said, blaming him for putting AIG in a situation where it had a $60 billion debt without the money to pay it. Updated Moments Ago.
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Music, Film, TV and Political News Coverage. DealBook Briefing: Reliving Wall Street’s Near-Death Experience. Ten years on, we remember the turmoil of the weekend that marked the inflection point of the financial crisis.