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AIG's Liddy Repeats Promise To Step Down When Replacement Found

Ed Liddy, appointed by the U.S. government to run troubled insurance giant AIG last September and who is receiving a salary of $1 per year, today repeated his pledge to step down once his successor is found.

Liddy, who left retirement to take over AIG, has always seen himself as a turnaround manager who would leave once the company is nominally back on its feet.

"Much work remains to be done at AIG, but much has already been accomplished," Liddy said in a statement. "Our pace of success ... is likely to take several years. AIG should have a leadership team committed to a similar time horizon and prepared to carry the plan to completion."

AIG's big problem was its Financial Products division, which operated like an internal hedge fund, Fed Chairman Ben Bernanke has said. The division sold credit default swaps and derivatives, which is fine in theory, but you have to have the assets to back them up if the market turns south. Which AIG did not have when the crisis hit.

Because AIG is the world's largest -- and evidently most financially complex -- insurance company, its entanglements with other financial institutions were were deemed so many as to create a systemic risk to the global system were AIG to fail.

As a result, the government has thus far plowed or promised more than $150 billion of taxpayer money into AIG and owns 80 percent of the company.

-- Frank Ahrens
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By Frank Ahrens  |  May 21, 2009; 4:48 PM ET
Categories:  The Ticker  | Tags: AIG, Edward Liddy  
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