Greenberg Has Questions For Liddy

BY ALLISON BELL
National Underwriter News
December 2, 2008


The former chairman of American International Group Inc. is asking the current chairman where a new, multisector, credit default swap financial venture got $35 billion in cash collateral.

Maurice Greenberg, who left AIG, New York, in 2005 and now is the chairman of C.V. Starr & Company Inc., New York, and Greenberg associates have included that question in a letter sent to AIG Chairman Edward Liddy Monday.

Greenberg and associates filed a copy of the letter with the U.S. Securities and Exchange Commission today.

AIG announced the creation of a $70 billion multisector CDS purchase financial entity Nov. 10, at the same time that it announced other efforts to work with the Federal Reserve Bank of New York and the U.S. Treasury to restructure the emergency financing the government is supplying to help support AIG.

"Dear Ed," Greenberg and associates write in the letter. "We have reviewed the restructured government funding for AIG Set forth below are some questions related to this announcement. Please respond to these questions as soon as possible. Investors in AIG securities need to know the answers to these questions and U.S. taxpayers should know how their tax dollars have been used."

In addition to asking where the parties got the $35 billion in cash collateral mentioned in a description of the CDS purchase entity deal, Greenberg and associates ask:

- What else was paid to those CDS counterparties?

- Who are those counterparties?

- How much of the $38 billion New York Fed lending facility has been drawn?

- How much of the drawn amount has been paid over to securities lending counterparties?

- Has that amount been paid to counterparties or has the cash been posted as collateral for the benefit of those counterparties?

- How much remaining exposure does AIG have in the securities lending business above the amount drawn on the New York Fed lending facility?

"Thank you in advance for providing answers to these critical yet simple questions," Greenberg and associates conclude in their letter.

Copyright © 2008 FBIC (www.badfaithinsurance.org)



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