Wednesday, January 9, 2013

AIG Executives Personify The Incredible Ugliness of the Greedy

An Account of Unbridled Arrogance Previously Found Only in Fiction

Karl Marx said, or felt, or believed or wrote something to the effect that Capitalism would destroy itself.  He must have had the senior management of AIG in mid when he reached that conclusion.  Need proof? 

AIG considers suing government for bailing it out, world implodes in on itself


Really, in the history of headlines has anyone ever expected to see something like this?  Here are some details.

The board of AIG, according to the New York Times, is weighing whether to join a $25 billion lawsuit against the U.S. government for forcing unacceptably high losses on shareholders in its bailout. The argument is that this violated the Fifth Amendment’s prohibition on the government seizing private property without just compensation.

And here is the reaction of the reporter who reported the story in the Washington Post.

To anyone who closely followed the events of September 2008, when AIG was bailed out, this theory seems patently ridiculous. Here’s a refresher on what happened. The company’s financial products division had been, in effect, selling guarantees against losses on highly rated securities tied to mortgages. When those securities plummeted in value, the losses in that division were so great that it brought one of the world’s biggest financial firms to the brink of bankruptcy. When AIG executives turned to the government for help on Sept. 16, 2008, the day after Lehman Brothers went bankrupt, they had no other options; no private entity would lend them money.

So what did the government do?

The initial bailout was a loan of up $85 billion at an interest rate of Libor (the short-term bank lending rate) plus 8.5 percentage points. And in exchange for getting the lending facility at all, the New York Fed took on 79.9 percent of the company’s stock. The bailout would eventually expand to $182 billion and a 92 percent government stake in AIG.

See AIG people, the government did this reluctantly.  In fact it was done under the administration of that noted Marxist(?) George W. Bush, and in fact the company is being sent back to the private sector by Marxist/Lenin President Obama.  But the message to the disgruntled AIG folks is simple, hey, anytime you wanted to step up the plate and put up $182 billion you were free to do so.  George W. Bush certainly did not want to nationalize AIG, so he might have let you have the deal for less, say $180 billion.  All you had to do was come up with the money.

As for the people actually considering suing the government over the bailout, they have certainly set the standard for all time for a level of self-indulgence, arrogance, entitlement, and a total lack of gratitude.  Yes, it is impossible to imagine a more purely offensive group of people, and this Forum has had plenty of experience in this area.

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