Despite having been forced out, ex-AIG (AIG) CEO Hank Greenberg has continued to be a major booster of the company, and an advocate of government intervention. Unhappy with the first and the second bailout efforts, Greenberg has a WSJ op-ed today arguing that AIG needs an even better bailout — one more like the Citi (C) model.
Off the bat, what’s most bizarre is his insistence on using the word punitive to describe efforts heretofore. Punitive suggests the bailout was a punishment. But the alternative was bankruptcy, so in what way was it a punishment?
See in Greenberg’s view, the problem is not AIG. Right off the bat he states
We are living in unprecedented times. The federal government’s intervention in the markets has become critical to the maintenance of confidence in our economic system, as last week’s rescue of Citigroup suggests. Substantial public assistance will be necessary to restart many parts of our economy.
Basically, because everyone needs assistance, AIG’s woes can’t be AIG’s fault. And if it’s not AIG’s fault, then why is their bailout more punitive (less rewarding to shareholders) than anyone else’s? In Greenberg’s view, the only winners are AIG’s CDS counterparties, while the losers are shareholders and anyone who works at AIG — he’s predicting thousands of job cuts.
Remember though, the original deal was that AIG was going to liquidate its assets rapidly to pay back the government — this was the promise, which AIG has already wriggled out of. Then again, they’ve already hinted that they’d like to wriggle out of the second deal, as well.