AIG is not going to slap American taxpayers in the face after all.
Yes, American International Group Inc was considering suing the government over the 2008 bailout that saved them from their bad decisions, but apparently they’ve had a rethink. Back in 2008, AIG was authorized to get up to “$182 billion from the Treasury Department and the New York Federal Reserve”. In 2013, AIG was going to join a $25 billion lawsuit initiated by a former AIG CEO against the government for “forcing unacceptably high losses on shareholders in its bailout” (because they were doing so well on their own?).
Senator Elizabeth Warren (D-Mass) took AIG to task yesterday, saying, “Beginning in 2008, the federal government poured billions of dollars into AIG to save it from bankruptcy. AIG’s reckless bets nearly crashed our entire economy. Taxpayers across this country saved AIG from ruin, and it would be outrageous for this company to turn around and sue the federal government because they think the deal wasn’t generous enough.”
AIG could have gone to bankruptcy court like some of the other too big to fails when no one would extend any credit to them, but they wanted a handout from the government after making very risky bets in sub prime mortgage-backed securities that didn’t pay off. AIG is a multinational insurance corporation, not a bank. As such, it was not regulated by the feds like federally regulated banks are.
The American public awaits their bailout so that they can consider suing the hand that fed them. But first, taxpayers, you must go gamble all of your money without putting up the collateral to pay up if you lose, and be forced to choose between bankruptcy and a bailout (wouldn’t it be nice to have the option?). If you chose to be bailed out, you accept the terms for the loan which normally require collateral (but in your privileged position, you are not used to having to put up collateral so this angers you. Where’s your free ride, you ask?).
Finally you take the bailout and put up the required collateral. Then you spend hundreds of thousands sending your executives on a $444,000 spa retreat and an $86,000 English hunting trip for the great job they did. While you’re at it, you figure you might as well divvy out $165 million in executive bonuses. Wait, scratch that – it might be as much as $450 million and bonuses. Well, no, if we’re adding bonuses for the whole company it might be $1.2 billion. Shared sacrifices, I tell you!
Back on your feet years later (if by back on your feet, you are thinking you can buy milk, no — this is back on your feet corporate style, which means CEOs were living it up, but still… all was not as it was!), you may wish to sue the government for bailing you out because you don’t like the terms. You think you’re worth more than you got from the stingy taxpayers. Yes, you think you get to set the terms based on what banks got, but of course, if you were a federally regulated bank, you would not have been making money hand over fist via the risky business you were in. So, that’s a NO to regulations, but a YES to what the regulated institutions get from the government.
However, AIG is more than happy to assert its privilege as an insurance company when it’s trying to avoid the Volcker Rule, which is part of Dodd-Frank. The Volcker Rule prohibits speculative trading at financial firms that get federal support. See how that works? First they want to be treated like a bank when that’s convenient and then they want the freedoms of an insurance company. The mixing of banking and insurance is one part of how we ended up in the mess we were in, which is just another reason why Dodd-Frank seeks to qualify major companies as important financial institutions (thus subject to federal regulation).
The anti-regulation corporate shills have the bad taste to suggest they are entitled the the bailout terms of the regulated banks, while screaming about government interference. Head bang.
The culture of entitlement continues unabated.