Edward M. Liddy, the dollar-a-year chief executive leading the
American International Group since its bailout last fall, still owns a significant stake in
Goldman Sachs, one of the insurer’s trading partners that was made whole by the government bailout of A.I.G.
Mr. Liddy earned most of his holdings in Goldman, worth more than $3 million total, as compensation for serving on the bank’s board and its audit committee until he stepped down in September to take the job at A.I.G. He moved to A.I.G. at the request of
Henry M. Paulson Jr., then the
Treasury secretary and a former Goldman director.
Details about his holdings were disclosed in Goldman’s proxy statement and confirmed by an A.I.G. spokeswoman, who said they constituted “a small percentage of his total net worth.” Mr. Liddy had already owned some stock in Goldman Sachs before joining its board in 2003.
He has said that he considers his work at A.I.G. to be a public service, performed on behalf of the taxpayers, who ended up with nearly 80 percent of the insurance company. His goal is to dismantle the company and sell its operating units, using the proceeds to pay back the rescue loans. On Thursday, A.I.G. said it had sold its
car insurance unit, 21st Century Insurance, to the Zurich Financial Services Group for $1.9 billion.
Along the way, Mr. Liddy has clearly disclosed that A.I.G. was serving as a conduit, with much of the rescue money passing through and ending up in the hands of A.I.G.’s trading partners.
Goldman has said in the past that it had collateral and hedges to reduce the risk of its exposure to A.I.G.
Still, his stake could represent a potential conflict and is likely to reignite questions about Goldman’s involvement in A.I.G., and about why taxpayer money was used to shield A.I.G.’s trading partners from losses, when asset values plunged everywhere and most investors suffered greatly.
Had A.I.G. simply declared bankruptcy, the financial institutions doing business with it would have ended up in court, as they did in the case of
Lehman Brothers, fighting to get pennies on the dollar for their claims.
Instead, Goldman Sachs received $13 billion of the
Federal Reserve’s rescue money to close out various contracts it had outstanding with A.I.G. It was one of the biggest beneficiaries of the government rescue.
A spokeswoman for A.I.G., Christina Pretto, dismissed any suggestion that Mr. Liddy’s financial ties to Goldman might have shaped his actions at A.I.G.
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