Greenberg (pg. 8)

But it is not to be. The following weekend, on NBC's Meet the Press, Paulson telegraphs his intentions, saying AIG will be liquidated.

As the final terms of the loan are disclosed, Greenberg is forced to acknowledge that AIG will soon no longer exist. The terms of the deal, in effect, provide a tremendous incentive for AIG to draw down most if not all of the $85 billion, an amount that cannot be raised privately. That means that AIG will be sold in pieces to buyers around the globe.

Greenberg could play a role. His "survival vehicles" - C.V. Starr and SICO - have been badly hit by AIG's stock collapse, but they still maintain a war chest of more than $4 billion, thanks to sales they have made of AIG stock. And Greenberg, still held in high regard abroad, could attract deep-pocketed investors.

C.V. Starr has already taken out a full-page advertisement in the Wall Street Journal to attract some of the lucrative specialty-insurance business that made AIG rich. AIG officials have said they would not hesitate to sell to Greenberg if he has a compelling bid. But whether or not state regulators would allow Greenberg to operate American insurance entities remains an open question, given the legal cloud that hangs over him.

Greenberg's legal future remains uncertain. At presstime he was scheduled for a third deposition by the New York attorney general's lawyers, who had not yet grilled him at length about the Gen Re case. The SEC hasn't yet acted on the Greenberg matter, but civil charges could come soon. An argument can be made that the collapse of AIG, and Greenberg's visibility over the past several weeks, make him a juicier target for prosecutors and securities regulators. Though the process is not supposed to be political, it often is. And after corporate collapses, the government frequently goes looking for a fall guy. But holding Greenberg legally accountable for the current derivatives implosion would be a stretch. Many of the transactions occurred long after he left, as did the company's disclosure problems. And the direct impact of accounting manipulations at the center of the current government investigations seem like pale, old things when you compare them to the recent calamity.

***

After the government intervention is announced, Greenberg sits down with Fortune for an interview, seeming years older than he did just a month ago in Switzerland, and tired. He is a multibillionaire no more. He and Corinne's AIG shares are worth around $113 million. He is adamant that he bears no responsibility for the current crisis and is convinced that if he had been at the helm, the company would still be strong. He says he would have pulled out of the CDO business long ago and never would have done so many transactions.

Much dust will have to settle before the role played by Greenberg - and many others - in the current financial crisis can be fairly judged. Greenberg certainly had a hand in his own company's demise and is still facing government and private litigation. His view of his own responsibility is entirely without nuance. He says that his biggest error was selecting directors and a successor without backbones. "The biggest disappointment you have in life is in people. To have them act the way they did goes beyond disappointment - it goes to the question of character and courage." Over his favorite meal, baked scrod with almonds, he says, "I've lived a pretty good life. I served my country. I raised a good family. I had the privilege of meeting Mr. Starr."

But the past several years have been difficult. "What makes it even more painful is this," he says: "It took 40 years for a group of people who worked together to build this. It was like a band of brothers. And then you look at it three and a half years later, and the company is on the rocks. You see what can be undone in a brief period of time. Never in my wildest dreams did I imagine this could happen at AIG.

"So is it painful?" Greenberg asks. His blue eyes are bright and moist. "Yeah. Bitterly painful."  

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