AIG: Still flagging (AP Photo/Mark Lennihan)
The AIG money pit
AIG “has become a money pit for the United States government,” said Breakingview’s Lauren Silva Fiona Maharg-Bravoin in The New York Times. Its newly restructured $150 billion bailout replaces an earlier $123 billion package, and “Bailout 2.0 looks like an improvement.” But it still puts all the risk on taxpayers while leaving private shareholders “a slice of any upside.” That’s too generous, and it makes “a persuasive Exhibit A” for better regulation of companies deemed “too big to fail.”
The U.S. bears some blame for having to bail out its “draconian” and counterproductive first bailout, said The Wall Street Journal in an editorial, and now that it has replaced the “‘rescue’ medicine,” it needs to “allow private capital to replace government control.” Kudos to the Treasury—“AIG lives.” Now, release it from the hospital.
Actually, it might be time to just kill off “the walking-dead insurance giant,” said Willem Buiter in The Financial Times online. It’s already burned through $81 billion of the original bailout, and counting, and the U.S. either needs to fully nationalize AIG—a bad option—or put it into receivership immediately and sell it off piecemeal. It deserves no less.
AIG promised a week ago to “pay off much of its borrowings by selling off pieces of itself,” said Nanette Byrnes in BusinessWeek online, and we’re still waiting for “a single major asset sale.” At this rate, we may be waiting for a long time.
Comment on this article
Recent comments | 12 total
Scuse my ignorance.... but isn't there a more responsible private insurer that can do the work that AIG was supposed to do.. and with government assistance clean up the mess that they created?
Well done!!! This article portrays what we were afraid of when the $700 BILLION was first mentioned. I have heard the CEO speak and he seems rational and new to the board of AIG; but does anyone remember in the 70s when AT&T was dissolved because it was too biiiggg??? We can't save the world but we are trying to save ourselves? I'm still looking for fresh ideas on the auto industry! Unions - that's not new!
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