From coverage of Congressional hearings in the New York Times (hat tip reader Tom):
[Former AIG CEO Martin} Sullivan also came under fire for reassuring shareholders about the health of the company last December, just days after its auditor, Pricewaterhouse Cooper, warned of him that AIG was displaying ”material weakness” in its huge exposure to potential losses from insuring mortgage-related securities….
Waxman unveiled documents showing AIG executives hid the full extent of the firm’s risky financial products from auditors, both outside and inside the firm, as losses mounted.
For instance, Federal regulators at the Office of Thrift Supervision warned in March that ”corporate oversight of AIG Financial Products … lack critical elements of independence.”
At the same time, Pricewaterhouse Cooper confidentially warned the company that the ”root cause” of its mounting problems was denying internal overseers in charge of limiting AIG’s exposure access to what was going on in its highly leveraged financial products branch.
[House Oversight Committee Chairman Henry] Waxman also released testimony from former AIG auditor Joseph St. Denis, who resigned after being blocked from giving his input on how the firm estimated its liabilities.