Of all the outrages to the American taxpayer in the last year, there is not one that can top the bailout of American International Group (AIG). After former Treasury Secretary Hank Paulson decided to let Lehman Brothers collapse 13 months ago in history's biggest bankruptcy ($639 billion), AIG -- with $1 trillion in assets -- was on the verge of toppling, too. Paulson saved it and we're all still paying.
How so? The threat of a downgrade of its debt repayment ability forced it to put up $14.5 billion in collateral against its Credit Default Swaps (CDSs) -- $14.5 billion that it didn't have. Rather than let AIG follow Lehman, Paulson decided to give it $85 billion for a 79.9 percent stake in the company -- a figure that eventually ballooned to $182 billion in U.S. taxpayer money.