AIG's source to pay back taxpayers: Taxpayers' money
Congress may get its way after all: it looks like AIG (AIG) may pay back the $165 million it gave out in bonuses.
According to Reuters, Treasury Secretary Timothy Geithner told Congress in a letter that, "We will impose on AIG a contractual commitment to pay the Treasury from the operations of the company the amount of the retention awards just paid."
What does that get taxpapers? Probably nothing. The government owns 80 percent of AIG, which means that the taxpayers do. AIG has needed more and more money to stay afloat. In essence, the cash given back to the government to repay bonuses would be coming out of the last slug of capital that the government put in.
The news points to the farce of criticizing AIG for its actions. With the Congress and Administration working on plans to save the economy, which total close to $2 billion, the AIG matter has become a distraction. There has been an outcry that the big insurance firm paid off credit-swap obligations to a number of banks. If they had not been paid, the companies would probably have suffered large losses and might have become the next bailout candidates.
The only way the government will get money back from its AIG investment is if the company can sell off most of its divisions. Right now the prospects for that are not looking very good.
Douglas A. McIntyre is an editor at 24/7 Wall St.