The agency's director, James Lockhart, appointed new CEOs and board chairmen after consulting with the Treasury Department. The conservator cannot liquidate the companies, but otherwise has full power to run them. But President Bush's successor is likely to appoint a new director of the agency, who will run the conservatorship, as well as a new Treasury secretary.
In the AIG bailout, the government received 80% of the stake in exchange for loans from the Federal Reserve that kept the company from bankruptcy. The Federal Reserve Board, which authorized the bailout, said the loan was designed to let the company sell some assets "in an orderly manner."
The government appointed Liddy as CEO and probably will replace the board. The government will have veto power over major corporate decisions, including whether to pay dividends to shareholders.
Sen. Charles E. Schumer (D-N.Y.) said Liddy's hiring was a good sign.
"They've appointed a very capable executive who was the head of another major insurance company," Schumer said. "Most of the parts of AIG are still making money. . . . So the idea is to keep the mainstay, this biggest American insurance company, still working." AIG is the largest U.S. insurer as measured by assets and the second-largest by premiums.
Insurance is regulated at the state level, so the sale of assets by AIG would have to be approved by the industry regulator in the state where an asset is based. The National Assn. of Insurance Commissioners has formed a working group to assist federal officials with the sales of AIG properties.
"We want to make sure they don't damage the health of the insurance properties," said California Insurance Commissioner Steve Poizner, a member of the working group. Five AIG companies are headquartered in the state, and 25 others do business there.
Daniel J. Mitchell, a senior fellow at the Cato Institute, a libertarian Washington think tank, opposed the AIG bailout. But he said U.S. officials were making responsible decisions about how to run the firms.
"It appears like they're doing the wrong thing in the best way possible," he said. "I assume that it's going to be somewhat akin to a company going into receivership, and we're not going to have the government so much running the company as giving approval process for the people who are left to run the company."
So far, it does not appear that political affiliation has played a role in placing executives at the companies.
