By Kim Dixon and Rachelle Younglai
WASHINGTON (Reuters) - U.S. regulators sent a letter to American International Group Inc warning of its lack of transparency and ability to oversee its financial products in March, a top Democratic lawmaker said on Tuesday.
Henry Waxman, who chairs the House Oversight and Government Committee, revealed the letter from the Office of Thrift Supervision and a warning by AIG's accountants about material weaknesses at a hearing into the insurer's near-collapse and federal bailout last month.
"We are concerned that the corporate oversight of AIG Financial Products ... lacks critical elements of independence, transparency, and granularity," Waxman read from the Office of Thrift Supervision's March 10 letter.
U.S. lawmakers are holding a series of hearings to probe the causes of the financial crisis and to propose changes to the regulatory structure.
AIG's woes led the Federal Reserve Bank of New York to lend up to $85 billion to the cash-strapped insurer over two years in exchange for a 79.9 percent equity stake.
In prepared testimony, former AIG Chief Executives Hank Greenberg and Robert Willumstad blamed short sellers, fair value accounting standards and credit agencies' for the company's problems.
Greenberg left in 2005 following an accounting scandal for which he has denied any wrongdoing. He was AIG's largest individual shareholder before the federal bailout.
Willumstad was CEO from June 15 until mid-September, when the government put together the rescue package.
Eric Dinallo, New York State's insurance superintendent, testified that a federal bailout of AIG could not have been avoided because of the company's cash crunch.
Martin Sullivan, a former CEO who preceded Willumstad, will also testify.
(Reporting by Rachelle Younglai and Kim Dixon; Editing by Lisa Von Ahn)
