The Real AIG Outrage

Basket case AIG is such a mess that the government has now had to pump in another $38 billion on top of the already shocking $85 billion that came in the original bailout. So here’s our question: Why do AIG shareholders still own 20% of the company?

AIG’s stock is trading around $3, higher than immediately before the bailout. This is outrageous. The US taxpayer should now own 100% of the company, and existing shareholders should have been wiped out. If we got 79.9% of the company for $85 billion, we certainly deserve the remaining 20% for $38 billion.

So why don’t we own it yet? Probably because of accounting concerns. Our understanding is that the reason the government keeps taking 79.9% of companies in the form of warrants is that they don’t have to put them on the balance sheet.

Well, screw that. AIG is now a division of the government, owned by the US taxpayer. So let’s dispense with denial, seize the remaining 20%, and consolidate the damn thing.

See Also: Fed Forced To Lend Another $38 Billion to Pathetic AIG

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