That same old AIG storyBusiness, Insurance | September 15, 2010 at 1:41 am
Why is AIG being treated with kid gloves and being allowed to retrade its deal with taxpayers again? Why is one of the biggest wards of the state being treated with such patience and ease?
The original AIG deal that was struck with the Federal Reserve saw it get the same terms as any other private sector funding initiative. But that failed to raise enough money. Then the powers to be decided that the sub divisions of AIG would be sold off and the proceeds would go towards coming good on borrowings and there was no doubt among the upper management that exactly this would happen. This was a great solution in that AIG had to dismantle the very machinery that got it into this colossal mess in the first place. The interest on their borrowing was high, and so AIG was forced into taking rapid action so that they could repay taxpayers fast.
But the watchdogs were asleep when AIG asleep, or maybe they had turned the other way just temporarily. Assurances of divestment proved to be nothing more than empty words, a reflection of the systemic rot that had set into the company that had become so brazen as to flout regulatory rulings openly without much fear of any ramifications. Begging bowl in hand, they return to the White House and got even more money at a lower rate. It was a concession on the part of Uncle Sam, who was beginning to look like a chump and who perhaps should have sacked the board when he could have. And this happened not once, but thrice.
Who is sanctioning the retrading of these deals by AIG?
Even as these acts of intransigence were repeatedly perpetrated by AIG, reports have now emerged of yet another retrade of the AIG financing deal, all of this taxpayer money. What has been mooted is a plan of “accelerated repayment”, but what it is really is nothing more than a cloak and dagger show with everyone happy to extend and pretend that all is good. It seems to be that AIG is in free fall, and yet more and more money is being pumped into it with no sign of it being returned. It’s like that friend of yours that takes your money, promises to repay and then never does. How strangely accommodating the Treasury is when it comes to dealing with corporate fat cats, yet shows no concern when it comes to dealing with homeowners that need the money badly. What a strange dichotomy that is.