AIG: What “Taxpayers” “Own” and “Invest”

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5 Responses

  1. Bill Sjostrom says:

    Any idea where the $170 billion figure comes from? The media initially seemed to be going with $180 billion, then $173 billion and now $170 billion. In my working paper on the AIG bailout, I came up with $179.8 billion or $200.7 billion if you include borrowings under the Fed’s commercial paper program. Recent GAO testimony puts the figure at $182.5 billion.

  2. A.J. Sutter says:

    When you say “an unorthodox rescue mission that has … everything to do with stabilizing a terrifying economic situation,” are you speaking of the ostensible intent or of the likely effect of this “rescue mission”? If the latter, what would suggest that this mission will succeed?

  3. Lawrence Cunningham says:

    Bill: Thanks. The Treasury’s investment is relatively easier to measure, a couple of tranches of preferred stock payments that don’t change much; the NY Fed’s is harder because it is a combination of different types of long term debt, short term credit support, purchase of distressed assets at bargain prices, all of which is being repaid in various ways, including with cash from asset sales and transfers of other kinds of assets. Notably, the resulting capital strucutre is pretty clear: Fed is Debt; Treasury is Senior Equity; Greenberg et al are common equity.

  4. Lawrence Cunningham says:

    A.J.,

    Hard to say, natch, but Ed Liddy appears to be doing an impressive job:

    reducing AIG’s most dangerous book of business from $2.7 trillion to $1.6 trillion;

    preserving the high-performing businesses;

    paying down the Fed debt; and

    most impressive and important of all, being unflappable and holding up as a responsible person before hysterical, irresponsible grandstanding among Members of Congress at a House Committee hearing Wednesday.

  5. Lawrence Cunningham says:

    Update/Clarification: Making these points more acute, the Trustees of the Trust holding the preferred stock are appointed not by Treasury but the New York Fed, in consultation with Treasury. The Trust Agreement is here: http://www.newyorkfed.org/newsevents/AIGCFTAgreement.pdf

    Those who run the New York Fed are even more remote from accounability to taxpayers.