AIG Bailout
Posted by Ray on September 17, 2008 under Main | 
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As predicted AIG is going to be just fine, but this is a worst case scenario, a government bailout. As the Fed continues to socialize the financial industry we see firms such as JP Morgan, AIG Freddie and Fannie all becoming government entities. Whatever happened to capitalism is beyond us.
We felt that AIG would raise the capital privately, more than likely from China or the Middle East, and not from the federal government. Of course, while we knew this would end OK we were not happy to see a Fed bailout, but at least the money loaned was favorable to the US tax payer…11.5% interest and control over 79.9% of its common stock. They also replaced management, thank God, however, given the gravity of the situation there should be charges filed against all key members of the management team.
For them to not see the trouble brewing and not sell assets over the past 12 months is simply proving that corporate America is, for lack of a better term, incompetent. We are relieved to see that the crisis is over, but not please with how it was done, with Federal funds. This is a wake up call to the industry to get your crap in order.
Companies to watch:
WaMu (Washington Mutual) – same problems as all the rest
Wachovia – issues brewing there as well
Morgan Stanley – expect to see a buyer soon
Security Benefit – sub-prime exposure
AnnuityIQ also believes that another major bank failure is close, probably WaMu. While we were right about AIG we were wrong on the way it was rescued. Still, we were right overall…
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