Further Commotion at AIG
American International Group (AIG) Chairman and CEO Edward Liddy said Thursday he will leave his position as head of the firm once the board of directors is able to locate the appropriate replacements. The roles of CEO and chairman are likely to be split going forward, the company says. Liddy stepped into his position as CEO in September, at the request of previous Treasury Secretary Henry Paulson, when the company turned over a majority of its stake in exchange for a federal bailout. At the time, Liddy vocalized the arrangement was not permanent, but he didn't specifying exactly how long he would serve in such a capacity. Liddy, who has earned $1 for his work at AIG, has come under intense fire from congressional leaders for awarding employee bonuses while the company was kept afloat by more than $170 billion in bailout funds. But Liddy hopes he will leave with an "enhanced reputation" and a feeling as though he "stepped in at an incredibly vulnerable time and provided some stability." It’s easy to forget just how awful the situation was in September,” he said. Within hours of Liddy's announcement, AIG made the headlines yet again, as California insurance policy holders announced a suit against AIG, following a six month analysis of AIG's financial records which allegedly show the company "raided" California insurance companies to gamble on high-risk, sub-prime market investments in effort to keep the financial side of the firm afloat. The court action was filed by an insurance broker who purchased and sold over $15m of AIG life insurance. "The complaint presents the most in-depth financial analysis of the impact of the hundreds of billions AIG lost in the high-risk derivatives market," says Patrick DeBlase of Kiesel, Boucher & Larson, the co-lead counsel for the plaintiffs. The suit claims AIG channeled funds from its California insurance companies into a lending program that put over $75bn of AIG insurance assets at risk, using the companies' bonds and investments to speculate in high risk real estate mortgage securities. "AIG lost the gamble and taxpayers have paid over $180bn," the counsel for the plaintiffs said in a press release. Write to Kelly Curran.