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March 05, 2009

Cut bait on AIG

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!

Mark Mandelbaum
Overland Park

Comments

Engineer

Marctnts
Is AGI a bank? I thought they were an insurance organization and that their problems came from the fact that they were insuring banks or at least bank loans or deravities. Then when the leveraged house of cards came tumbling down AGI was caught as the insurers. But I'm still trying to understand just how 'deravities" worked and how you could "leverage" things 30 or 40 times.

solomon

NE,

Agree 100% on GM. They knew when they asked for bailout money that they were going to file BK within 6-12 months. No entity that large would decide and announce something like that without months of deliberation.

NoMoreMrNiceGuy

Cut bait on all bailouts. GM pulled a fast one. Let them and any other entiity or individual that has poor fiscal responsibility fail.
Rewarding deadbeats does not change their behavior.

Marctnts

I've been amazed by the HUGE amount of consideration / debate / outrage over the automaker bailout, but the almost complete lack of these when it comes to the bank bailouts, specifically AIG.

whispering_to_kc

Mandelbaum?

Or, are you old Mr. Potter hoping for the failure of George Bailey's Building & Loan so you can pick up the pieces for pennies on the dollar?

 
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