Aig Decision

The U.S. government took power of American International Group Inc. in an $85 billion agreement that revealed the concentration of its concerns about the jeopardy. A subside could pose to the financial system. The step marks a dramatic turnabout for the federal government, which had been robustly defy proposals from AIG for an emergency loan or some intercession that would prevent the insurer from falling into bankruptcy. “There's been criticism of the bailout, but it pales when compared to widespread outrage over the $165 million that AIG paid recently in employee bonuses. Republicans have gone on the offensive against the Obama administration, while Democrats are scrambling to recoup the bonus payments.”( Sorkin) The question that everyone is asking is if they have the legal rights to distribute bonuses to Ceo’s after accepting bail out money to prevent AIG from going bankrupt and the answer to that is they do.
The initial AIG deal of $85 billion had come under fire from all sides - from lawmakers and citizens upset by what they saw as a bailout of a company that took on too much risk and didn’t deserve the money, and by financial experts who said the plan would have required AIG to sell assets amid a falling market while paying high interest rates on its loans”That $85 billion deal grew to $123 billion through pieced-together plans, but this new $150 billion plan formalizes a structure designed to deal with one of the main criticisms of the plan, which was that it forced AIG to unload assets quickly during a bear market and credit crunch. These new measures establish a more durable capital structure, resolve liquidity issues, facilitate AIG's execution of its plan to sell certain of its businesses in an orderly manner, promote market stability, and protect the interests of the U.S. government and taxpayers,” the Federal Reserve said in its statement.” (Karnitschnig)
A.I.G. does not have enough assets to cover its private and government accountability. “The...