Mr. Liddy, who came out of retirement to take over AIG when it collapsed into the government's arms last year, returned to Washington today to go before Congress. In March, Liddy hit a low as chief executive as he defended his decision to pay bonuses at a unit of the insurer that helped sink the company.
Except for the day my mother died four or five years ago, it was probably the worst day of my life," said Mr. Liddy in a recent interview with The Wall Street Journal.
The AIG trustees are looking for new board members, and the new board is expected to search for the next CEO, say people familiar with the situation. In the interview, Mr. Liddy, 63 years old, said he wants to step down when he feels he has made "enough progress," and "not longer than a year" from now.
The former CEO of Allstate Corp., Mr. Liddy is in Washington to talk about AIG's business plans. AIG's three trustees, appointed by the government to represent the taxpayers' 80% stake in the company, also will be on the hot seat, responding to questions about what they have been doing and how they are accountable to taxpayers.
In prepared testimony released Tuesday, the trustees say they are actively seeking new AIG board members.
At least five executives have been offered board seats, and candidates' decisions are expected this week, people familiar with the matter said. They include Robert S. "Steve" Miller, Delphi Corp.'s executive chairman and former CEO; Douglas Steenland, former CEO of Northwest Airlines Corp.; Christopher Lynch, a retired KPMG partner; Harvey Golub, a former head of American Express Co.; and Arthur Martinez, who ran Sears, Roebuck & Co., now Sears Holdings Corp.
Spokespeople for all the men declined to comment except for Mr. Martinez, who couldn't be reached Tuesday.
The CEO post mightn't be an easy one to fill.
The company is pursuing a multi-year plan to restructure and pay back a massive government loan. And AIG is "a complex little beast," Mr. Liddy said, "substantially more complicated than ... I thought it would be."
Immediately after Mr. Liddy took the helm, a market downturn undercut efforts to sell assets to repay the government. The government has revised the bailout three times, and has now committed up to $173.3 billion.
As the aid package has grown, more stakeholders, from regulators to politicians, are demanding that Mr. Liddy answer to them. There are "a lot of bosses," said Mr. Liddy, who is both CEO and AIG chairman.
Today, he plans to urge Congress to scale back the vitriol. "Rampant, unwarranted criticism of AIG serves only to diminish the value of our businesses around the world," his prepared testimony says.
Mr. Liddy didn't relish this chance to return to the Hill -- the possibility of compelling him to appear by subpoena was raised before the company said that he would testify Wednesday.
Another issue likely to come up is compensation. The trustees say they have asked Mr. Liddy in conjunction with senior management and the AIG board to review compensation and develop by year end a comprehensive compensation program.
Stephen Bollenbach, the AIG board's lead independent director, echoed the challenges with compensation.
"A continuing story is that we need retention payments, which are simply being delayed. Ed at every meeting wrestles with this issue. ... Ed has told his executives 'this is what we're going to do for you,' but can't quite make it come true."