It's too soon to say what the probes by New York State Attorney General Eliot Spitzer and others will reveal. AIG has admitted giving intentionally false information to regulators during an inspection of its property-casualty business. This may have improperly boosted AIG's reserves, revenues, and stock price. More revelations could follow.
Yet legacies take time to develop. Michael Milken, who was prosecuted by then-U.S. Attorney Rudolph Giuliani, served 22 months in prison for securities violations relating to insider trading. Yet the man who invented the junk bond market now is remembered as much for the companies that were financed by these instruments -- and his support for medical research -- as for his transgressions. As a result, Milken's legacy is a favorable one in much of the business community.
The perception of President Richard M. Nixon has also been subject to revision. For many years, Nixon's name was associated with Vietnam, the Watergate break-in, and impeachment hearings. But already his legacy has come to include foreign policy and the opening up of China to the U.S.
AIG may turn out to be as odious a corporate scandal as any, and Greenberg's reputation may suffer great damage. Shareholders have already lost billions. Greenberg ran AIG for decades, and what may once have been widely acceptable practices no longer are. Much the same thing happened in the investment banking world, where conflicts of interest by analysts were known and condoned in the boom years -- until the bust made them unacceptable. The legal and moral lines are shifting in the business world. Greenberg may rightly pay the price of being too arrogant to recognize the changes. Perhaps he remained in office too long, as some CEOs do, filling AIG's board with directors who didn't challenge him for years.
It's important to take stock of Greenberg's accomplishments, however. Even executives brought down by scandal are entitled to be judged as much for what they built as for how they ended their reign.