Reply #18: AIG Breakup LIkely [View All]

[ozymandius]

AIG Breakup LIkely

Two observations: First, every time AIG has retraded its deal the US taxpayer has come out worse, so my assumption in the absence of conflicting evidence is that this is more of the same.

Second, many observers refer to AIG as "nationalized" due to the government's 79.9% ownership. But has the Federal Reserve, for instance, asked board members to submit letters of resignation? Power is not simply a function of standing, but also of will, and the powers that be seem to have exercised just about no influence, save the ouster of CEO Robert Willumstad and raising a stink about fancy parties. Note the desire expressed to keep AIG afloat. In context, it could just as well mean preserving their standing as a private concern, rather than merely operating as a business. If AIG were truly nationalized, rating agency downgrades would not be an issue; the firm would be treated as state owned, hence state backed and deserving of an agency-type rating.

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