{"page":"\u003clink rel=\"stylesheet\" href=\"https://lessonplanet.com/assets/packs/css/resources-c03aa079.css\" /\u003e\n\u003clink rel=\"stylesheet\" href=\"https://lessonplanet.com/assets/packs/css/lp_boclips_stylesheets-517835be.css\" media=\"all\" /\u003e\n\u003cdiv data-title='AIG CEOs called before Congressional committtee' data-url='/boclips/videos/5c54bf98d8eafeecae1445a4' data-video-url='/boclips/videos/5c54bf98d8eafeecae1445a4' id='bo_player_modal'\u003e\n\u003cdiv class='boclips-resource-page modal-dialog panel-container'\u003e\n\u003cdiv class='react-notifications-root'\u003e\u003c/div\u003e\n\u003cdiv class='rp-header'\u003e\n\u003cdiv class='rp-type'\u003e\n\u003ci aria-hidden='true' class='fai fa-regular fa-circle-play'\u003e\u003c/i\u003e\nVideo\n\u003c/div\u003e\n\u003ch1 class='rp-title' id='video-title'\u003e\nAIG CEOs called before Congressional committtee\n\u003c/h1\u003e\n\u003cdiv class='rp-actions'\u003e\n\u003cdiv class='mr-1'\u003e\n\u003ca class=\"btn btn-success\" data-posthog-event=\"Signup: LP Signup Activity\" data-posthog-location=\"body_link_boclips\" data-remote=\"true\" href=\"/subscription/new\"\u003e\u003cspan\u003e\u003cspan\u003eGet Free Access\u003c/span\u003e\u003cspan class=\"\"\u003e for 10 Days\u003c/span\u003e\u003cspan\u003e!\u003c/span\u003e\u003c/span\u003e\u003c/a\u003e\n\u003c/div\u003e\n\u003c/div\u003e\n\u003c/div\u003e\n\u003cdiv class='rp-body'\u003e\n\u003cdiv class='rp-info'\u003e\n\u003cdiv aria-label='Hide resource details' class='rp-hide-info' role='button' tabindex='0'\u003e\u0026times;\u003c/div\u003e\n\u003ci aria-label='Expand resource details' class='rp-expand-info fai fa-solid fa-up-right-and-down-left-from-center' role='button' tabindex='0'\u003e\u003c/i\u003e\n\u003ci aria-label='Compress resource details' class='rp-compress-info fai fa-solid fa-down-left-and-up-right-to-center' role='button' tabindex='0'\u003e\u003c/i\u003e\n\u003cdiv class='rp-rating'\u003e\n\u003cspan class='resource-pool'\u003e\n\u003cspan class='pool-label'\u003ePublisher:\u003c/span\u003e\n\u003cspan class='pool-name'\u003e\n\u003cspan class='text'\u003e\u003ca data-publisher-id=\"30356011\" href=\"/search?publisher_ids%5B%5D=30356011\"\u003eCurated Video\u003c/a\u003e\u003c/span\u003e\n\u003c/span\u003e\n\u003c/span\u003e\n\u003c/div\u003e\n\u003cdiv class='rp-description'\u003e\n\u003cspan class='short-description'\u003e1. Wide of hearing2. House Oversight Committee Chairman, Henry Waxman, swearing in witnesses former AIG Chief Executive Officers, Martin Sullivan (right) and Robert Willumstad (left)3. Sullivan and Willumstad being sworn in4. SOUNDBITE:...\u003c/span\u003e\n\u003cspan class='full-description hide'\u003e1. Wide of hearing\u003cbr/\u003e2. House Oversight Committee Chairman, Henry Waxman, swearing in witnesses former AIG Chief Executive Officers, Martin Sullivan (right) and Robert Willumstad (left)\u003cbr/\u003e3. Sullivan and Willumstad being sworn in\u003cbr/\u003e4. SOUNDBITE: (English) Henry Waxman, House Oversight Committee Chairman (over cutaway):\u003cbr/\u003e\"While average Americans are suffering economically; they're losing their jobs, their homes and their health insurance. Yet less than 1 week after the taxpayers rescued AIG, company executives could be found wining and dining at one of the most exclusive resorts in the nation.\"\u003cbr/\u003e5. Cutaway of audience\u003cbr/\u003e6. SOUNDBITE: (English) Chris Shays, Republican Congressman from Connecticut:\u003cbr/\u003e\"I'm interested in learning more about the corporate decision-making that took a solid insurance business into the far less stable world of credit defaults, swabs and other exotic derivatives.  They thought they were selling insurance, when in fact they were betting the company's soul in a high stakes game of Russian roulette.\"\u003cbr/\u003e7. Cutaway Sullivan and Willumstad\u003cbr/\u003e8.  SOUNDBITE: (English) Robert Willumstad, Former CEO of AIG:\u003cbr/\u003e\"The week of September 8th the rating agencies indicated they would no longer wait to review AIG's ratings until September 25th.  AIG was in a vicious circle: the rating agencies were considering a downgrade, largely because of market driven liquidity concerns but it was a downgrade or the threat of one that would trigger a liquidity crisis.\"\u003cbr/\u003e9. Cutaway Sullivan and Willumstad listening\u003cbr/\u003eFormer top executives of insurance giant American International Group Inc testified in Congress on Tuesday, as a congressional panel probed the chain of events that forced the government to bail out the conglomerate.\u003cbr/\u003eThe hearing is the second in two days into financial excesses and regulatory mistakes that have spooked stock and credit markets and heightened fears about a global recession.\u003cbr/\u003eMaurice \"Hank\" Greenberg, who ran AIG for 38 years until 2005, did not appear at the hearing.\u003cbr/\u003eBut in a written statement he blamed the company's financial woes on his successors, former CEOs Martin Sullivan and Robert Willumstad. \u003cbr/\u003eThey, in turn, cast much of the blame on accounting rules that forced AIG to take tens of (b) billions of dollars in losses stemming from exposure to toxic mortgage-related securities.\u003cbr/\u003eAIG, crippled by huge losses linked to mortgage defaults, was forced last month to accept an 85 (b) billion US dollars government loan that gives the US an 80 percent stake in the company. \u003cbr/\u003eLast week, AIG said it had drawn down 61 (b) billion of the loan and planned to sell off some of its business units to pay off the loan.\u003cbr/\u003eHouse Oversight Committee Chairman Henry Waxman (D-Calif) opened the hearing by lambasting the company for spending more than 440-thousand US dollars to hold a weeklong retreat for its executives at a luxury resort in California less than a week after receiving its 85 (b) billion US dollars federal bailout. \u003cbr/\u003eNeither Sullivan nor Willumstud were working at AIG at the time.\u003cbr/\u003eCongressman Christopher Shays, a Connecticut Republican, said officials at AIG had played \"Russian roulette.\"\u003cbr/\u003e\"I'm interested in learning more about the corporate decision-making that took a solid insurance business into the far less stable world of credit defaults, swabs and other exotic derivatives.  They thought they were selling insurance, when in fact they were betting the company's soul in a high stakes game of Russian roulette.\"\u003cbr/\u003eLawmakers also upbraided Sullivan, who ran the firm from 2005 until June of this year, for urging AIG's board of directors to waive pay guidelines to win a 5 (m) million US dollars bonus for 2007 - even as the company lost 5 (b) billion US dollars in the 4th quarter of that year. \u003cbr/\u003eSullivan countered that he was mainly concerned with helping other senior executives.\u003cbr/\u003eSullivan also came under fire for reassuring shareholders about the health of the company last December, just days after its auditor, Pricewaterhouse Cooper, warned him that AIG was displaying \"material weakness\" in its huge exposure to potential losses from insuring mortgage-related securities.\u003cbr/\u003eAIG's problems did not come from its traditional insurance subsidiaries, which remain healthy, but instead from its financial services operations, primarily its insurance of mortgage-backed securities and other risky debt against default. \u003cbr/\u003eGovernment officials feared a panic might occur if AIG couldn't make good on its promise to cover losses on the securities; investors feared the consequences would pose a threat to the US financial system, which led to the government bailout.\u003cbr/\u003eAIG suffered huge losses when its credit rating was cut, thanks largely to complex financial transactions known as \"credit default swaps.\" \u003cbr/\u003eAIG was a major seller of the swaps, which are a form of insurance, though they are not regulated that way.\u003cbr/\u003eThe swap contracts promise payment to investors in mortgage bonds in the event of a default. AIG has been forced to raise (b) billions of dollars in collateral to back up those guarantees. \u003cbr/\u003eAIG stopped selling credit default swaps in 2005 to limit its exposure, but the damage was done.\u003cbr/\u003eWaxman unveiled documents allegedly showing AIG executives hid the full extent of the firm's risky financial products from auditors, both outside and inside the firm, as losses mounted.\u003cbr/\u003eFor instance, Federal regulators at the Office of Thrift Supervision warned in March that \"corporate oversight of AIG Financial Products ... lack critical elements of independence.\"\u003cbr/\u003eAt the same time, Pricewaterhouse Cooper confidentially warned the company that the \"root cause\" of its mounting problems was denying internal overseers in charge of limiting AIG's exposure access to what was going on in its highly leveraged financial products branch.\u003cbr/\u003eWaxman also released testimony from former AIG auditor Joseph St. Denis, who resigned after being blocked from giving his input on how the firm estimated its liabilities.\u003cbr/\u003eIn prepared testimony, former AIG chief executive Sullivan said many of the firm's problems stemmed from \"mark to market\" accounting rules mandating that its positions guaranteeing troubled mortgage securities be carried as tens of (b) billions of dollars in losses on its balance sheet.\u003cbr/\u003eThis in turn, said former AIG chief executive Willumstad, who ran the company for just three months after Sullivan left, forced the firm to raise (b) billions of dollars in capital. \u003cbr/\u003eThe federal rescue came after AIG suffered disastrous liquidity problems after its credit rating was lowered, forcing the company to come up with even more capital.\u003cbr/\u003e\"AIG was in a vicious circle,\" Willumstad said in the testimony.\u003cbr/\u003e\u003c/span\u003e\n\u003c/div\u003e\n\u003cdiv class='action-container flex justify-between'\u003e\n\u003cbutton aria-expanded='false' 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