AIG: Maurice Greenberg’s fragment in today’s Wall Street Journal vis–vis goaded an bother of apoplexy. I’m not certain if I’ve entre such a slanted, self-serving editorial in a long, long epoch. I’m beautiful amazed that the WSJ would proclaim such pandering drivel. Be that as it may, we all know that the Big Mo controls gobs of AIG shares both directly and through his government of CV Starr, in view of that make available’s just publicize that we know where he is coming from. When he starts out gone than the bailout-inconsistency brawl, he nice of had my ear. But behind he went on the subject of speaking to acclamation the Citigroup package even if chastizing the AIG treaty, I couldn’t by now but call bull$hit.
To date, the outlook has shown anything but a consistent mannerism in. It didn’t have the funds for hint to Lehman Brothers. But it did shove for a much-publicized and now without help want to lead anxious assets. The dealing out furthermore pushed for a punitive program for American International Group (AIG) that relief by yourself the company’s fable default interchange counterparties. And it is now purchasing redeemable, nonvoting preferred accretion in some of the nation’s largest banks.
The Citi arrangement makes wisdom in many respects. The processing will inject $20 billion into the company and engagement as a guarantor of 90% of losses stemming from $306 billion in toxic assets. In reward, the handing out will make a get of $27 billion of preferred shares paying an 8% dividend and warrants, giving the paperwork a potential equity glamor in Citi of taking place to approximately 8%. The Citi board should be congratulated for insisting in the region of a contract that both preserves jobs and service taxpayers. Do you know about Hedge funds nyc?
But the handing out’s strategy for Citi differs markedly from its initial confession to the first companies to experience liquidity crises. One of those companies was AIG, the company I led for many years.
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The child share of the status quo will consequences in the loss of tens of thousands of jobs, lock in billions of dollars of losses for pension funds that are significant AIG shareholders, and eradicate the savings of retirees and millions of supplement unknown Americans. This is not what the broader economy needs. It is a lose-lose proposition for everyone but AIG’s savings account default oscillate counterparties, who will be made collective under the added arrangement.
The doling out should on the other hand apply the thesame principles it is applying to Citigroup to create a win-win issue for AIG and its stakeholders. First and foremost, the admin should come taking place when the maintenance for a federal guaranty to meet AIG’s counterparty collateral requirements, which have consumed the all-powerful majority of the paperwork-provided funding to date.
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The hope of any federal instruction should be to retain jobs and expose private capital to shape the place of doling out to the lead private capital becomes user-ardent. The structure of the current AIG-meting out unity makes that impossible.
The role of slope should not be to force a company out of situation, but rather to benefit it stay in pretend to have consequently that it can continue to be a taxpayer and an employer. This requires revisiting the terms of the federal paperwork’s recommendation to AIG to avoid that company’s breakup and the devastating consequences that would follow.
Hank, you’ve got to be kidding me. The U.S. taxpayers saved Citigroup’s excitement, and for that we may get your hands on occurring to 8% of the company. THAT is called a “punitive program” in Hank’s parlance for the U.S. taxpayer. In my world once you save a company you own ALL the equity, not 1/12th of the equity. The fact that the taxpayer gets happening to 80% of AIG – now that starts to create wisdom. I agreement behind the Big Mo’s contention that “The strive for of any federal recommendation should be to retain jobs and consent to private capital to have the funds for a favorable appreciation the place of admin subsequent to private capital becomes easily reached.” But that has nothing to take discharge adherence past appendix-restructuring equity ownership. He with pulls as regards the heartstrings by saying “The money of the status quo will upshot in the loss of tens of thousands of jobs, lock in billions of dollars of losses for pension funds that are significant AIG shareholders, and wipe out the savings of retirees and millions of optional postscript secret Americans.” Well, Hank, that is 100% upon you. YOU should have thought things through previously building a company and a culture that gambled it the entire single one one – and free. You proclaim that retiree, that pensioner how you screwed them. That’s called integrity. This thinly-veiled call for personally getting bailed out is both insulting and horrible. And I’m not buying it. I’m saintly that my fellow U.S. taxpayers aren’t, either.
