From the Big Picture's Marion Maneker, this pointed response to Uncle Hank Greenberg's congressional appearance yesterday:

There seems to be a sad pattern developing among the formerly august financial figures of the passing generation. We’ve seen Alan Greenspan and Robert Rubin twist themselves into verbal pretzels in order to deny any responsibility for the current state of the financial system. Now, Maurice “Hank” Greenberg joins the fraternity of former titans unwilling to accept that they were present at the creation of our current destruction. From today’s Wall Street Journal we have this gem:

“I don’t feel any responsibility at all” for AIG’s problems, Mr. Greenberg said in the interview. “How can I be responsible for something that occurred when I’m not there?”

Mr. Greenberg remains a major shareholder in AIG, though the value of his holdings has declined by hundreds of millions of dollars since the start of 2008. Mr. Greenberg, who also controls a company that is AIG’s largest private shareholder, played down the impact of the stock’s slide on him personally.

“Of course, I lost considerable net worth,” said Mr. Greenberg, who also heads another firm, C.V. Starr & Co. “But I’m working. My life is not materially changed.”

Nice to hear that Greenberg hasn’t been inconvenienced. And it would be comforting to accept his version of events where the only problem with AIG was the lack of his steady hand on the tiller. See, this what you get for chasing him out of office and giving the job to a back-bencher like Martin Sullivan.

But Noam Scheiber does an excellent job of explaining two facets of Greenberg’s culpability. The first is that Greenberg presided over the growth and metamorphosis of AIG-FP into the dangerous threat that it would become after he left. It was Greenberg, after all, who put the infamous Cassano in charge of the division knowing that he required exceptional oversight.

But the second line of responsibility is more indirect. Cassano went off the rails when AIG lost its triple A credit rating eventually racking up huge bets on subprime mortgages to replace the easy money he was making exploiting AIG’s ratings arbitrage. One of the reasons Cassano was able to get so far off the reservation was that AIG’s management was pre-occupied with putting out the fires created by Greenberg’s aggressive actions, the ones that led to Spitzer’s pressure for Greenberg to step down. Here’s Scheiber:

in March 2005, Greenberg resigned from AIG amid allegations of accounting improprieties. Within three weeks, AIG saw its precious triple-A credit rating downgraded. This was a body blow to AIG-FP, which relied on the rating to secure favorable terms for the contracts it signed. Many were so-called credit-default swaps (CDS)–essentially insurance for bonds that investors had purchased. The weaker its credit rating, the more AIG had to pledge in collateral to grease the deals – money it would have to fork over if the bonds suddenly depreciated. In general, the downgrade made AIG-FP less attractive to customers, who relied on the company’s credit rating as a guarantee it would pay up if the insurance were needed.

Between March, when Greenberg left AIG, and the end of 2005, Cassano’s division issued more than $40 billion in credit-default swaps (essentially insurance) for portfolios of securities backed by subprime mortgages. This was more than half of all the insurance of this type the company had on its books.

But if you really want to get into the weeds of good old Hank's legacy, you'll probably want to read this dissenting opinion from the Institutional Risk Analyst:

Our investigation suggests that by the time AIG had entered the CDS fray in a serious way more than five years ago, the firm was already doomed. No longer able to prop up its earnings using reinsurance because of growing scrutiny from state insurance regulators and federal law enforcement agencies, AIG’s foray into CDS was really the grand finale. AIG was a Ponzi scheme plain and simple, yet the Obama Administration still thinks of AIG as a real company that simply took excessive risks. No, to us what the fraud Bernard Madoff is to individual investors, AIG is to the global financial community.

IRA points out why AIG is getting such special treatment now:

Now you know why the Fed and EU officials are so terrified about an AIG liquidation, because it will result in heavy losses to or even the insolvency of banks and other corporations around the globe. Notice that while German Chancellor Angela Merkel has been posturing and throwing barbs at President Obama, French President Nicolas Sarkozy has been conciliatory toward the US.

But for the bailout of AIG, you see, President Sarkozy would have been forced to bailout SGE for a second time in two years. So long as the Fed and Treasury can subsidize AIG's mounting operating losses, the EU will be spared a financial bloodbath. But this situation is unlikely to remain stable for long with members of the Congress demanding an investigation of the past bailout, a process that can only result in bankruptcy for AIG.