Our political leaders, both former and present, have allowed their decision making to be influenced by a possible fear of failure, a fear of the unknown. The government’s additional $30 billion investment in American International Group now has taxpayers on the hook for more than $163 billion in a single company (3/2, A-1, “More bailout funds to AIG”). Projections of additional needs suggest the possibility of additional infusions of up to $250 billion.
There have been four separate interventions with AIG, each based solely on Washington politicians’ fear of what could happen if they allow AIG to fail on their watch. This is enough for a new television series.
Whatever happened to “Once burned, twice shy” or “Fool me once, shame on you. Fool me twice, shame on me?” How about “Fool me four, or even 163 billion times?”
Nobody knows with absolute certainty the consequences of an AIG failure. Historically, capital markets have used business failures as cleansing or purging tools. Washington politicians should not continue to allow themselves to be deluded into acting solely out of their fear of failure. We’re long past the time of cutting bait on AIG!