As America was racing toward the nationalization of what is left of American International Group, we couldn't help think of Eliot Spitzer. Among all his mistakes, it's hard to think of one more catastrophic than his decision to force Maurice "Hank" Greenberg out of the leadership of AIG. The picture since then has not been a pretty one. As Mr. Greenberg put it yesterday in a letter, "In a little over a year, I, and other shareholders, have watched the company that I helped build over 35 years into the largest and most successful insurance company in history and one of the strongest and one of the most profitable companies in the world lose over 90% of its value."
It would have been another matter had Mr. Spitzer — or anyone else — found any wrong-doing by Mr. Greenberg. But they didn't. Instead, Mr. Spitzer's raid on AIG resulted in the installation of new management that, one can say at this point, just wasn't up to the job. As Mr. Greenberg put it in his letter yesterday to AIG's chief executive, Robert Willumstad: "Despite repeated assurances from management and the company that everything was under control, it is now clear that nothing was under control."
In his letter Mr. Greenberg said he had offered to help and that he remained ready to help despite having been rebuffed in the past. At least some prominent figures in the financial industry would like to see him get back involved in the company he helped to build. "I have the highest respect for Bob Willumstad, but I think a combination of Hank Greenberg coming back would be a big plus," the chief investment officer of Clearbridge Advisors, Hersh Cohen, told us yesterday.
This is something to think about as the U.S. government is preparing to nationalize the company. If New York state or federal authorities have been standing in the way of Mr. Greenberg's return, the best thing they could do is make clear that they have no objection. It would be the least they could do to atone for the initial mistake of forcing Mr. Greenberg out to begin with. And if, as the reports last night were indicating was likely, the federal government does go ahead and nationalize AIG, there's no one other than Mr. Greenberg who could come in more prepared to turn things around.