This is a rush transcript from "Your World With Neil Cavuto," November 17, 2009. This copy may not be in its final form and may be updated.
NEIL CAVUTO, HOST: All right. Well, Hank is back, and he ain't happy, and for good reason.
Hank has been warning here and everywhere that the government is rushing in to save AIG, but it's actually going to be making things a lot worse for AIG, now a new government report basically admitting Hank was right all along.
Here with us exclusive reaction, Hank Greenberg, the man who created the insurance giant, and winces a little bit, I'm sure, when he sees what has been happening since. What do you make of this?
HANK GREENBERG, FORMER CEO, AMERICA INTERNATIONAL GROUP: How have you been, Neil?
CAVUTO: I'm fine.
The government essentially saying, you know, we are not doing this right.
GREENBERG: Well, I think the report speaks for itself, doesn't it, if you've read it. I wrote — I read it last night.
CAVUTO: And I bet that you understood it.
GREENBERG: I understood it, yes. Of course I understood it.
CAVUTO: The gist of it is, we threw a lot of money at this puppy, and it is still a hurting puppy.
GREENBERG: Yes. Well, the original terms of $85 billion at 14.5 percent interest, plus a 2 percent fee, and 79.9 percent of the company, that was a little expensive, to say the least. And, obviously...
CAVUTO: Those are mob-like terms. Why did the company agree to it?
GREENBERG: Well, look, I don't think they should have. I think they would have been better off in Chapter 11. Everybody would have been better off in Chapter 11.
CAVUTO: The argument was at the time — and you and I chatted about this during the whole financial crisis — was that they were among those too big to fail, and if they went into bankruptcy, it would have been a domino effect.
GREENBERG: Well, you know, that's — you can't disprove that. You can't prove it either.
CAVUTO: Right. Right.
GREENBERG: And — but the fact of the matter is, of the — the report that I read last night that just came out, of the $85 billion, roughly $51 billion to $60 billion went out — went funneled through AIG to counterparties.
CAVUTO: Like Goldman, right?
GREENBERG: Goldman, Societe Generale, Deutsche Bank, Merrill, a whole load of them.
CAVUTO: So, it got them off the hook?
GREENBERG: What it did...
CAVUTO: But, presumably, the ones that had to really benefit in this case, or the ones for whom it was, you would think, intended weren't the real beneficiaries.
GREENBERG: Well, the — the thing that is hard to understand is that many of the CDOs that these institutions insured...
CAVUTO: These collateralized debt obligations.
GREENBERG: Yes, that — that they insured with credit default swaps with AIG, many of these, many of these instruments were selling way below par, par being 100 cents on the dollar.
CAVUTO: Right.
GREENBERG: And they were selling at 40, 50, 60 cents on the dollar. And they were paid par. And...
CAVUTO: Which didn't cut it.
GREENBERG: Well, you know...
CAVUTO: But you know what? Hank, I was thinking, if they went bankrupt, right — you had a large stake in the company.
GREENBERG: Yes.
CAVUTO: You were a billionaire many times over at that initial stage.
(CROSSTALK)
CAVUTO: You would have been wiped out entirely. At least now the understanding is that guys like Hank can make a go of it if this — they turn this puppy around. And it wouldn't have been possible in bankruptcy.
GREENBERG: No. I think that if AIG had Chapter 11 then — remember, the insurance businesses were all very healthy. OK? And there were no insurance company like AIG. And so I think they would have been — there would have been considerable salvage.
Remember, AIG did not have a solvency problem. It had a liquidity problem.
CAVUTO: Well, it also was victim of a crisis mentality.
GREENBERG: Yes.
CAVUTO: I should disclose here I have an AIG life insurance policy.
(CROSSTALK)
GREENBERG: That's...
(CROSSTALK)
CAVUTO: Well, you say that, but they have been valued at about 50 bucks. And my insurance agent said, Neil, I wouldn't — I wouldn't go out in traffic.
So, what I'm asking you...
(CROSSTALK)
GREENBERG: No, what I'm saying to you on that is, the insurance companies were state-regulated.
(CROSSTALK)
CAVUTO: All right. Well, let's hope so, because, Hank, I'm worried. I'm worried.
GREENBERG: You could not have touched those assets.
CAVUTO: OK. OK.
So, let's talk about you and now.
GREENBERG: Yes.
CAVUTO: A lot of the folks you said who took over the company since screwed things up, and a lot of them have gone since.
GREENBERG: Yes.
CAVUTO: And there is always this talk, well, maybe Hank can come back. Maybe he will come back.
What about that?
GREENBERG: No, I'm not going back to AIG.
CAVUTO: So, the other rumor that maybe Hank steals the people who are there.
GREENBERG: No.
(CROSSTALK)
CAVUTO: That is one that they don't let go of.
GREENBERG: Well, look, first of all, Bob Benmosche, who is now the CEO, is a pretty good man. I have known him for 20 years.
CAVUTO: And he is sick of this nonsense.
GREENBERG: Well...
(CROSSTALK)
CAVUTO: What did you make of his comments?
GREENBERG: Look, let me finish. I think he is a pretty good man. And I think, you know, he is doing a responsible job right now. He is arguing that — and he should — that you can't hold your good people if you're paying them $200,000 a year. That doesn't make any sense. They're going to go elsewhere.
CAVUTO: You think he quits, by the way?
GREENBERG: No, I don't think he will.
CAVUTO: He is whining a lot.
GREENBERG: Well, I don't know if he's whining. He is trying to get their attention, so they can pay a responsible amount of funds in order to keep the right people.
CAVUTO: Do you think he will get his way?
GREENBERG: I think there has to be some change.
Otherwise, you know all the good people will be hired by somebody else.
CAVUTO: How about you? You're the guy doing it.
(CROSSTALK)
GREENBERG: No, no, no, no, no. Neil...
CAVUTO: So, put that bed right now. The argument is that you're stealing the top talent there.
GREENBERG: Listen, we hired a few people. And a few people, I'm talking between 13 to 15 people. There's 130 went to another company. Forty-five went to somebody else. That's plain nonsense.
CAVUTO: But it gets attention when it is Hank Greenberg.
GREENBERG: No, listen, I'm just telling you that's — you know, don't go down that alley, because you're chasing nothing, OK? I'm serious. We have not hired many people.
CAVUTO: There's people trying to say that you're secretly trying — all right, I will kill them. I will put them out.
GREENBERG: No, first of all, we're not doing that. And, second, we're not the ones hiring them all. They're going to other companies.
CAVUTO: All right.
GREENBERG: And, so, that's — that's not an issue. I think the real issue is, you know, how do you — how do you restructure what was done to AIG? How do you redo that deal, so that the taxpayer can be paid back, without destroying AIG?
CAVUTO: The taxpayer will never be paid back. All this money?
GREENBERG: Not the way it is being — not with the terms that have been imposed on AIG. That is the point, Neil, that the original deal and even the one that was modified, you are never going to pay it back that way. They're selling off assets at below book value.
CAVUTO: Yes, I'm wondering, Hank, even when GM talks about paying the money back, I don't know where it's going to — I'm not — I'm not holding my breath waiting for a check. Well, even assuming it does and can, will any American see that money back?
GREENBERG: Neil, if you — if you do the deal, if you restructure the deal, the way it should have been done, rather than funneling money through AIG, and making them responsible for paying it back...
CAVUTO: Right.
GREENBERG: ... and you don't destroy the company by selling off pieces below book value — that makes no sense at all — then you will never pay it back.
CAVUTO: I ask you, it is too late to do that now?
GREENBERG: It is not too late to do that. It is not too late to do that. It can be done and should be done.
CAVUTO: The odds of it being done?
GREENBERG: Well, that's a political decision. That's a political decision.
Look, I think there ought to be a commission appointed that investigates this whole incident. The American people are entitled to know what really happened.
CAVUTO: All right.
You're still a billionaire?
GREENBERG: No.
CAVUTO: Really?
GREENBERG: No.
CAVUTO: Multi-hundred-millionaire?
GREENBERG: I don't check my — that every day. I'm working real hard.
CAVUTO: But you don't have to check the prices on the menu?
(CROSSTALK)
GREENBERG: I'm — I'm checking — I am working very hard.
CAVUTO: Really?
GREENBERG: I don't eat out a hell of a lot.
(LAUGHTER)
CAVUTO: OK.
Hank Greenberg, thank you very much, a war hero, one of the greatest financial minds of the last century. Can he turn that old haunt around? Let's see.
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