The arrogance of these directors! As the Lehman Brothers debacle showed, the Fed was not rescuing AIG because AIG “deserved” to be rescued. The Fed was rescuing AIG–exercising its powers under Section 13(3) of the Federal Reserve Act for the first time that I know of since the Great Depression–because of the risk that the bankruptcy of the firm would pose a systemic risk to the real economy. AIG didn’t “deserve” anything. It’s rescue was necessary, and the interests of its management and shareholders irrelevant.
AIG’s directors seem to think they were entitled to a bail-out that put the risk on the taxpayers but left the profit to the shareholders. Outrageous! It’s unclear (at least to me) from the SEC filing whether the government’s security interest in AIG’s assets is senior to that of other creditors, but if it’s not, then I’d say the government didn’t go far enough.
The only remark that may be more ridiculous than the remarks of AIG’s directors is the letter AIG founder Hank Greenberg sent to the company complaining that its current management had “presided over the virtual destruction of shareholder value built up over 35 years.” Greenberg, after all, was in charge of AIG on the way up. Pretty churlish to blame those with the bad fortune to be in charge on the way down.
TedF
Feldstein literally hoist by his own petard.
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p>Pity the Directors didn’t have personal liability up to 80% of their assets.
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p>I agree completely with you.
Although I will admit, somewhat abashedly, that I’m not sure I completely understand everything that’s going on right now. Today, “stocks soared” on news that the gov’t is maybe gonna buy a bunch of bad debt from banks…pardon my ignorance, but what do the taxpayers want with a pile of broken mortgages? Sounds like another lose/lose situation for the most part.
creeps think. Arrogant is right. I am sure they are thinking that: “we did not become this powerful by accepting less than the best deal” They probably consider the rest of us their enemies.
there may be some truth to what Greenberg said. I can’t find an exact date for when AIG jumped into the credit default swap business, which appears to be what did them in. But if it was after the time that Greenberg left, he might have a point.