U.S. Rep. Brad Miller harshly criticized the head of troubled insurer AIG today.
During testimony by American International Group Chairman Edward Liddy this afternoon, the Raleigh Democrat went after the company for using $49.5 billion of federal bailout money to pay off credit insurance policies held by banks.
In an exchange that was broadcast live on CNN, Miller said that the research on banking crises in other countries shows it is crucial to maintain "market discipline" by ensuring that businesses that made bad decisions suffer.
"Are we maintaining market discipline by continuing to give money to AIG to pay unsecured creditors?" he asked, brusquely.
Liddy responded that the company was no longer paying off its insurance policies, then added that the company had to honor its contracts.
"To your basic point, we owe those people that money," he said. "It's just a fact of life. ... The result of not paying them is an event of default, and it forces the (other) company into bankruptcy."
Previously: Miller criticizes Treasury Department.
Correction: An earlier version of this post included an incorrect link.