(Update includes additional comments from Willumstad's speech, updated stock price)

GARDEN CITY, N.Y. (TheStreet) -- American International Group (AIG:NYSE) will end up just a shell of its former self after working out the massive government support that staved off its collapse a year ago, its former chairman and CEO said Thursday.

Robert Willumstad, who took over for Maurice "Hank" Greenberg as chairman of the company in 2006 before serving a short stint as CEO after Martin Sullivan was ousted in the wake of the government bailout, gave a bleak outlook for the troubled company in a speech at Adelphi University on Long Island, his alma mater.

"It owes the government more than it has the ability to pay back," Williamstad said.

The comments come amid a wild ride for the stock, which has spiked and dipped on heavy volume in recent weeks as traders bet on its ability to get out from under the government's control.

The stock was recently down 0.9% to $46.28.

The Treasury and Federal Reserve have extended $180 billion worth of support since bailing out the insurance giant on Sept. 16, 2008. A major part of its plan for paying the government back is selling off key assets from its sprawling business.

In the speech, titled "The Role of the U.S. Government in the Financial Crisis," Willumstad said he was going to tell attendees "what happened, according to yours truly," after turning down most interview offers. He said most media accounts of the events around AIG did not accurately depict what happened.

"It's often hard to believe these are the same events I participated in...," he said. "What has been written and recorded has distorted the facts."

He went on at length about the proceedings at the time of Lehman Brothers bankruptcy, the liquidity crisis that strangled AIG's credibility, credit and counterparties, and how he and regulators interacted.

He said AIG seemed to be an afterthought to then-New York Fed President Timothy Geithner, Treasury Secretary Henry Paulson and others in government, despite repeated calls from Willumstad, until the last moment as he prepared to draw down its last credit line that Tuesday -- the last step before bankruptcy. As Lehman neared bankruptcy, the CEOs of big banks like Bank of America (BAC:NYSE), Citigroup (C:NYSE), Morgan Stanley (MS:NYSE), Goldman Sachs (GS:NYSE) and JPMorgan Chase (JPM:NYSE) were distracted, hatching a plan to rescue Lehman as AIG floundered on its own amid escalating collateral calls.

"As CEO for 91 days, I don't necessarily accept any personal responsibility" for what occurred, Willumstad said. He added that he "arguably" prevented AIG's outright bankruptcy by aggressive negotiations with his "friends at the Fed."

Willumstad told TheStreet that new CEO Robert Benmosche "appears to be quite a feisty guy" who has "as good a chance as anybody of righting the company."

Willumstad called the government's takeover of mortgage giants Fannie Mae (FNM:NYSE) and Freddie Mac (FRE:NYSE) the week before AIG's near-failure a crucial turning point of the crisis that's largely been ignored.

He called the government's decision not to save Lehman a "huge mistake." He also criticized the government's decision not to protect Fannie and Freddie's preferred shareholders "a serious mistake," as well.

Willumstad heaped blame on former Fed Chairman Alan Greenspan for holding interest rates too low for too long. He also blamed regulators for not having any agency tasked with overseeing systemic risk. The Obama administration's regulatory overhaul would charge the Fed with those responsibilities.

-- Written by Lauren Tara LaCapra in Garden City, N.Y.