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Hank Greenberg: Some Pig

Adam Rust's picture

Posted October 27, 2009

There are pigs, and then there are capitalist pigs.  And among the capitalist pigs, Maurice "Hank" Greenberg can rut like none other.

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As much as C.V. Starr deserves genuine credit for founding and developing AIG, his close friend Hank Greenberg is often thought of as the man who built AIG.  Greenberg has been on the sidelines, at least by his own standards, since he was ousted from AIG in 2005 over violations of accounting rules.  Since then, he has been battling AIG in court.  He was able

to get $4.3 billion out of AIG this spring in a lawsuit over his retirement accounts.  No worries, though, he's back: Greenberg's latest maneuver, at age 84, is to ramp up an old, but relatively small, insurance firm - the C.V. Starr and Co., Inc..  Most of the activity is with subsidiary Ironshore, founded in 2006, and based out of Bermuda.

First order of business: hire away the staff from AIG.

Second order of business: rent Lehman's old Park Avenue office space, but register your company in Bermuda.

Business Week suggests that he's not out there just to stay healthy, but instead to exact some revenge upon his old company.

Why This Matters

One insurance executive called it "AIG Two." Perhaps it is not a coincidence that long imagined restrictions on salaries on Wall Street have now been explicitly spelled out just last week by Kenneth Feinberg.  Since C.V. Starr isn't under TARP restrictions on salaries, those new hires can escape the ire of social responsiblity and return to selling bizarre financial products.

It's a new day.  But it is very possibly a reiteration of the same old ways.  Right now, this is an insurance business.  Will these ex-AIG's turn back to selling credit-default swaps and putting new strains on our economy?

Moreover, this is a deliberate ruse.  The smartest guys in the room are back at it again, evading responsibility and putting their interests at odds with the public.  By taking business from AIG, C.V. Starr is undermining the ability of AIG to generate the revenue that it will need to pay taxpayers back for our investment in the company.

The Dark Lord

As I write this, I am sure that someone from Hank Greenberg's dark universe is giving me one black mark.  You see, in spite of being convicted for a variety of illegal business practices, he remains at the controls of some of our most powerful institutions.  Here are the few of the institutions where he serves on the board, or in a key advisory capacity:

  • Kissinger Associates
  • US-Korea Business Council, US-China Business Council
  • Council on Foreign Relations
  • C.W. Starr Foundation ($1.25 in charitable assets)
  • The Rockefeller Family's public works: Asia Society, Rockefeller University, Museum of Modern Art
  • Universities: NYU (trustee), Cornell  (board), Yale - benefactor.

I guess its the company he keeps.  Henry Kissinger is a friend.  His son was CEO of Marsh & McLellan.  Ken Starr's a relative.  He's been even more active in his salad days: He was the the chair of the New York Stock Exchange,  Deputy Director of the New York Branch of the Federal Reserve, Reagan asked him to be deputy director of the CIA.  Hank turned him down.  Too busy.

Like his son, Hank Greenberg's work practices have attracted the ire of government regulators.  Both were among defendants in a suit initiated by Eliot Spitzer that charged AIG and Marsh with rigging bids for insurance contracts in a scheme that was facilitated by payoffs of decision-makers.  Jeffrey Greenberg retired, Hank Greenberg soon left to pursue other opportunities, and the suit was settled out of court.  Greenberg did pay a $15 million fine.

In short, an indictment of Hank Greenberg is an indictment of many of our most powerful institutions.  But that is why, among many pigs, he is Some Pig.

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