In letter sent to current AIG CEO Edward Liddy on Monday, Greenberg questions details linked to the roughly $150 billion loaned to the New York-based insurer by the federal government. Among them, what counterparties are involved and the total amount drawn from specific loans.
"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," Greenberg wrote in the letter disclosed Tuesday in a regulatory filing with the Securities and Exchange Commission.
Greenberg's questioning comes as he said he wants the U.S. government to provide a federal guaranty to AIG to help it meet counterparty collateral requirements. Collateral requirements have consumed the vast majority of the government funds given to AIG to date, Greenberg said an opinion piece in the Wall Street Journal on Tuesday.
In mid-September, the Federal Reserve said it would loan AIG $85 billion to help the insurer stave off bankruptcy. The Fed added a $38 billion loan in October. The insurer was later allowed to access another $20.9 billion through the Fed's "commercial paper" program.
But that has not been enough to shore up the company, which is so big and interconnected to other firms that its failure would devastate the economy.
Last month, the government announced new restructured financial assistance to the company.
Under the new plan, the Fed will provide $60 billion in loans, and the Treasury will provide $40 billion to buy up preferred stock. The government also will spend close to $53 billion to buy up mortgage-backed assets and other AIG contracts on debt.
Total package: $153 billion.
The $40 billion going to AIG will buy preferred shares of company stock, giving taxpayers an ownership stake. In turn, restrictions will be placed on executive pay at the firm. Last week, AIG said it would limit how much it pays its top executives, including granting a $1 salary for this year and the same for 2009 to CEO Liddy.
AIG and the federal government have faced criticism for putting taxpayer money on the hook to rescue a private financial company.
Greenberg said a guaranty would allow a large portion of the previously drawn capital from the federal credit facility to be repaid and redeployed elsewhere in the financial system with no loss to the American taxpayer. The government is providing this type of guaranty to Citigroup Inc. and should apply the same principle to AIG, he said.
Under the restructured loans, AIG gets easier terms on the Fed loans, reducing the risk it will have to sell off assets at fire-sale prices to pay back the government. But interest payments are still eating up too much of AIG's capital, forcing the company into "effective liquidation," making jobs impossible to keep and decreasing the likelihood taxpayers will be repaid, Greenberg wrote.