The folly of breaking up AIG

AIG (AIG) costs the U.S. government more money with each passing month. AIG has survived on a $150 billion handout from the U.S. government. In exchange, tax payers own 80% of the company. But the company, which was once the largest insurance firm in the world, is projected to post a loss of $60 billion for the last quarter.

For reasons that are difficult to understand, the government and AIG are currently negotiating to further restructure the company. One of the plans being discussed is breaking the firm into several pieces with a portion of the company's assets being distributed to each of the newly created firms. According toThe Wall Street Journal, "The assets, expected to include some of AIG's Asian holdings, would likely be spun off and may be taken public with the government owning a major stake."