After lawmakers agreed yesterday to used the once despised Hank Greenberg’s roadmap-to-a-better-AIG, the company’s shares soared 21 per cent–making Greenberg $588 million richer, the New York Post reports.
Greenberg proposed his plan to the Oversight and Government Reform Committee in April, calling AIG”s bailout a “failure.” But he’s been calling for a sweeter deal for AIG since last December.
In a statement in April Greenberg said: “Since the day the treasury announced its plan to liquidate AIG, value has been destroyed because AIG’s people and their relationships — AIG’s business — are leaving. The evidence is overwhelming and indisputable that the American taxpayer is an investor in a steadily diminishing asset.”
Under Greenberg’s plan, AIG will reduce the level of government ownership, cut the interest rates on loans from taxpayers and extend its time to repay. If it pays off, it could be a boon for taxpayers who currently don’t stand a chance of getting anything back on their investment in the company.
The biggest problem is that it holds out the threat of rewarding AIG and its shareholders for failure. When the bailout was put in place, we were told the company would go into disolution mode. Greenberg’s plan aims at restoring the company to health–with massive taxpayer assistance. And that is a terrible policy to adopt.