This is a rush transcript from "Your World With Neil Cavuto," September 17, 2008. This copy may not be in its final form and may be updated.

NEIL CAVUTO, HOST: Here now the fellow who founded that company AIG and on paper at least, lost billions of dollars, I think about $6 billion. But rest assured, Hank Greenberg is still doing OK. He is still a billionaire so please do not cry for him. Hank, good to see you.

HANK GREENBERG, AIG FOUNDER: Yeah, not too sure about that. Start crying for me.

Video: Watch Neil Cavuto's interview

CAVUTO: Do you take a look? Hey, what I am worth today, what am I not worth? Last time this week you were worth a lot more.

GREENBERG: I sure was.

CAVUTO: What happened?

GREENBERG: You know, God, where do you start? You have to manage a company. And unfortunately, it was not being managed, not the way it should be. And they got into difficulty in a class of business they should not have done. No one seemed to be minding the store from a risk management point of view. We had controls that were in place. Things could not get done unless we knew about it and approved it. That seems to have disappeared.

More interviews, videos and tools on 'Your World' homepage

CAVUTO: Should the government — if they were those kinds of mistakes, the argument was, why should the government bail it out?

GREENBERG: AIG, as far as I know, was not bailed out.

CAVUTO: It was taken over.

GREENBERG: It was taken over.

CAVUTO: You would have preferred like an emergency credit line but not an outright takeover. The government obviously felt otherwise. What do you think about that?

GREENBERG: I think it was wrong. With all due respect, I believe that AIG needed a credit line. They could have done several things. And I had offered this. Sometime before. The governor was kind enough to get the insurance departments to work on permitting AIG to upstream about $20 billion of excess capital.

CAVUTO: You could tap the revenues off of your subsidiaries, something that Governor Paterson in New York.

GREENBERG: Excess capital could have been moved up, OK? Could have raised at least $30 billion from wealth funds and other sources. We could have had a rights offering, could have sold $10 billion to $20 billion of assets.

CAVUTO: All that was ignored, though.

GREENBERG: I understand that.

CAVUTO: Why?

GREENBERG: I do not know. Look, I reached out to AIG for the last to talk to months and offered to help in any way possible. I wasn't seeking anything. I was trying to protect.

CAVUTO: You were always rebuffed, right?

GREENBERG: I was always rebuffed.

CAVUTO: Now, did you ever talked either to the Treasury Secretary Paulson or to any of the authorities who ultimately decided we have to do this?

GREENBERG: No. I did talk to Tim Geitner at the New York Fed. I told him as the largest shareholder, I hope we would have a seat at the table. I got no real response. I placed a call for Hank Paulson. Yesterday morninh. I got a call back, I am told. On my voicemail. At 7:00 this morning. So I have not spoken to him.

CAVUTO: From him or from his person.

GREENBERG: From his office.

CAVUTO: I see. Do you feel, as they do, that AIG was too big to fail? So an outright takeover would ensure that it would not fail. Where credit lines might keep the bleeding going.

GREENBERG: I do not think that is right for several reasons. The underlying insurance operations always were great. They still are. How long they will stay that way, I do not know. There is a lot of people are around the world, very upset. They lost their fortunes. They lost their life savings. Other insurance companies are going to be feeding on them. And so stemming that bleeding is going to be very important. So if you had a credit line and you were not taking the company over, essentially, you would diminish that problem.

CAVUTO: But would you have erased it? I think the fear with this. And I'm not being the government advocate here, you cannot be a little bit pregnant. You have to be either all the way in or all the way out. The rap against the government was when it let Lehman go, they were going to be all the way out with you. Because you are much bigger and AIG has its tentacles and everything. The feeling is the message we're getting from Washington is tough love. Instead, to you, they said, tough luck.

GREENBERG: That was the way they thought, I think there was an error. Because AIG was fundamentally a strong company. It had a couple of things going at the parent company. AIG Financial Products that were the problem. You could carve that out and you could deal with that.

CAVUTO: I guess the feeling was, Hank, it got to be a bigger problem. I don't want to make this too arcane but that part of the business was the part that was getting into insuring all of this bad stuff, right? And the fear that was bigger than earlier thought. And that AIG had a cancer on its hands.

GREENBERG: I don't know. I have not been there for three and a half years. So I can't tell you that. But whatever it was, you could have dealt with that because AIG is fundamentally a very strong company. And its insurance operations cannot be replicated. It is in 130 countries, it's open markets around the world. It was a national asset, as I said on Maria Bartiromo's show the other day.

CAVUTO: That name rings a bell.

GREENBERG: You've heard of her.

CAVUTO: Here's what I found interesting in this whole argument that all of a sudden we are saying that healthy institutions, you are suddenly not healthy. Today was a good example. Goldman getting knocked down. Morgan Stanley getting knocked down. So the good and the healthy all get caught up here. That, to me, has like just a panic to nature to that. Where does this go?

GREENBERG: I think there is a rethinking of the business models. Clearly, if you are doing business and you're leveraging 20 times your capital, it is not the same as it was. People are a little concerned about that.

CAVUTO: But they're throwing the baby out with the bathwater.

GREENBERG: I understand that. And exactly what's happening.

CAVUTO: Play it out. Where does it go?

GREENBERG: The Glass-Steagall Act said a separate banks from investment banks. We are going back and throwing Glass Steagall out and going back and banks and investment banks will be under one roof because they have got to be able to raise capital.

CAVUTO: Now they are now regulating. Everyone wants to regulate. It's the Democratic mantra, it's the Republican mantra. Everyone I talk to. Do we need to reregulate?

GREENBERG: I think — look, you need to think about regulation all the time. You have to think about, do the new institutions that are merging or have emerged, are they being adequately regulated? And if so, what kind of change do you need? The need to drop some regulation and add new types of regulation. But regulation should not be strangulation either. It should not hobble you so that ...

CAVUTO: The argument was as you know that we were to loose with regulation. And that led to these problems.

GREENBERG: It did not have to. Because what is regulation? You cannot replace management with regulation. Management is still responsible in the final analysis. If you do the right risk management and you have the right controls, then regulation is not going to make a difference. Because if you have poor management, you can have all the regulation in the world and that will not change anything. And so my guess is that the problems have come about have been management problems more than regulatory problems.

CAVUTO: I have got to ask you, we don't have much time, are you bitter?

GREENBERG: Bitter? Yes, I'm bitter about some things that occurred, absolutely.

CAVUTO: There doesn't seem to be a recourse here?

GREENBERG: What do you mean there's not a recourse?

CAVUTO: It does not seem like there is anything to do, the train has left the station.

GREENBERG: I am understand that, but there are a lot of things we are doing. I am looking forward, not backwards.

CAVUTO: What does that mean?

GREENBERG: I am building.

CAVUTO: With what?

GREENBERG: Well, CV Star (ph) and Star International Diversified (ph), we have capital to build on.

CAVUTO: You still have a lot of capital. You are being very modest.

GREENBERG: In the company.

CAVUTO: You would buy some AIG assets? Insurance assets?

GREENBERG: If AIG is going to sell some assets, we certainly want to be in the hunt. If not that, then we will do something else.

CAVUTO: You are being coy with me.

GREENBERG: Never coy with you.

Copy: Content and Programming Copyright 2008 Fox News Network, LLC. ALL RIGHTS RESERVED. Transcription Copyright 2008 ASC LLC (www.ascllc.net), which takes sole responsibility for the accuracy of the transcription. ALL RIGHTS RESERVED. No license is granted to the user of this material except for the user's personal or internal use and, in such case, only one copy may be printed, nor shall user use any material for commercial purposes or in any fashion that may infringe upon Fox News Network, LLC'S and ASC LLC's copyrights or other proprietary rights or interests in the material. This is not a legal transcript for purposes of litigation.