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

NOW WATCH: Money & Markets videos

Want to read a more in-depth view on the trends influencing Australian business and the global economy? BI / Research is designed to help executives and industry leaders understand the major challenges and opportunities for industry, technology, strategy and the economy in the future. Sign up for free at

Tagged In