AIG's CEO, Trustees called to answer by Congress

By Kevin Drawbaugh and Lilla Zuill

WASHINGTON/NEW YORK (Reuters) - American International Group Inc CEO Ed Liddy met some harsh criticism at a congressional hearing on Wednesday as lawmakers demanded answers on the taxpayer bailout of the giant insurer.

Rep. Dennis Kucinich wagged his finger at Liddy, who was brought in as chief executive last September to help right the company, and accused AIG of cheating the pension funds of public employees in Kucinich's home state of Ohio.

"I came to Congress not to represent these people on Wall Street who have been shafting the American people ... not going to let you get away with it," Kucinich told Liddy, who receives an annual salary of $1.

AIG, once the world's largest insurer, was bailed out last September after large derivatives losses threatened to drive it into bankruptcy.

Liddy told Congress the insurer had a plan in place that should allow it to repay taxpayers. "If the marketplace holds the way it is right now, we think that the American taxpayer will be fully repaid," he told the hearing, before House of Representatives Committee on Oversight and Government Reform.

"It will take somewhere between three to five years," he said, adding that if the economy worsens, it could be longer.

The hearing was the second time members of Congress have upbraided Liddy for events at AIG, including retention bonuses earlier this year for executives of a financial products unit responsible for most of the company's financial bleeding.

Liddy, in a recent interview with Reuters, said he understood the anger but found it hard to stomach personally.

"There is fear about the economy, and people are worried about their jobs and getting their kids through school," he said.

"It is difficult to be the recipient of that kind of abuse when I am on the side of the taxpayer, brought in to help," he added.

STEWARDS

Trustees of the government's nearly 80 percent stake in AIG told the hearing they were taking steps to make a "fresh start" at the insurer.

They have named five nominees to the AIG board, to be voted on at the company's annual meeting, which has been postponed until later next month.

Trustee Douglas Foshee, chief executive of natural gas producer El Paso Corp, said a reshaped board was needed to give AIG "a fresh start -- a restart."

Media reports have named the five as Harvey Golub, a former American Express CEO; Christopher Lynch, a retired KPMG partner; Arthur Martinez, former head of Sears, Roebuck & Co; Robert "Steve" Miller, Delphi Corp's executive chairman, and Douglas Steenland, former CEO of Northwest Airlines Corp.