Remember when the AIG deal was first announced? We were told that the taxpayer might actually make money on it, and that while the company sold off units, us lenders would be collecting exorbitant rantes. Well the initial terms got watered down several times, and yeah, not so much on the unit sales.
Bloomberg: AIG said Sept. 16 it will sell assets to repay an $85 billion loan from the Federal Reserve. Liddy has now concluded that plan won’t work, said two people with knowledge of the matter, who declined to be identified because discussions with the government are private. AIG may hand over stakes in some operations directly to the U.S. to reduce its debt, one of the people said yesterday.
Look, we’re not trying to pick on Ed Liddy. He largely inherited this mess and is trying to do best by his shareholders. What’s more, our impression is that the government feels it’s not really bailing out AIG, so much as it’s bailing out AIG’s counterparties. The best evidence for that is the company’s $.50 share price.
But the language of the “taxpayers will make money” still irritates us, since that’s how almost every government action has been sold to us. We’d rather they just be honest and say: Yes, the taxpayers will get hosed, but that’s the price you have to pay for steps that we think are necessary to preserve civilisation. And then we could judge things from there.