180 billion goes into the crapper Citi, Goldman Sachs, overseas banks..
MALONEY: Your testimony that AIG would have been better off if going into Chapter 11 -- at this point, the taxpayers have put $180 billion into AIG, and you're telling me AIG would have been better off. My question is: Would the taxpayers have been better off if AIG had gone to Chapter 11. The taxpayers would have their $180 billion, it would be part of our Treasury, but what would have happened to our economy, in your judgment, if AIG had gone to Chapter 11?
GREENBERG: Well, if AIG went to Chapter 11 at the very beginning and didn't -- and didn't have access to the $85 billion at those generous terms of 14 percent interest and 79.9 percent of the company, what would have happened? There would have been -- there would have been a bankruptcy, but a bankruptcy court would have taken hold of it, and the counterparties would have been general creditors.
It would not have affected the insurance subsidiaries. They're insulated from that bankruptcy. State laws protect them, and they were adequately capitalized. So it wouldn't have affected the insurance subsidiaries. It would have affected AIG Financial Products....
MALONEY: But the impact on the overall economy -- we're told that if AIG had failed, the whole economy would have come down. There was a report that AIG prepared for Treasury that made it sound like the world was going to come to the end if AIG had gone into Chapter 11.
I have asked several times for the Treasury's analysis of why it was critical for the financial stability of our country to save AIG. I am waiting for that to come forward.
But my main point is what would have happened to the overall economy, and you are basically saying nothing would have happened to the American economy.
The critical insurance arm which is so critical for finance in our country would have been independent and saved, and the risky products over in London -- who got the majority of the bonuses, by the way, and caused all the problem -- it would have -- they would have lost their jobs. It would not have tumbled the markets. It would not brought down the housing market. It would not have brought down insurance. It would -- basically, are you saying it would not have impacted in any major way the American economy? Am I correct in what you're saying?
GREENBERG: Well, I think there would have been a ripple, but it wouldn't have been -- it wouldn't have been -- it wouldn't have been catastrophic. The insurance companies would have continued doing business. They're protected. They were adequately capitalized, and that capital couldn't be moved around.
Would there be -- some business leave AIG and go to another company? Possibly. Competitors would have -- would have fed on the fact that AIG parent became bankrupt and the -- so competitors would have tried to move some business. But I don't think it would have been disastrous, any more than it is right now.The government has nationalized essentially AIG.
