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OPINION

Outrage Over AIG a Bit Late for Media

The opinions expressed by columnists are their own and do not necessarily represent the views of Townhall.com.

The media, both liberal and conservative, are currently up in arms that AIG might join the lawsuit against the U.S. government filed by former AIG CEO Hank Greenberg. 

He alleges the rescue (takeover) was unfair to AIG shareholders, and, of course, the American public is enraged in what appears to be the height of ingratitude after the government’s $182 billion bailout of AIG nearly five years ago. 

This whole thing is a bunch of baloney; it’s just another attempt to rewrite the history books of what actually happened during the great credit crisis of 2008. 

I do not minimize, excuse, or even forgive the role that AIG played as the “house” to all the risk-taking banks, hedge funds, and even the individuals who perceived the credit default swap (CDS)-derivative market as though it were Las Vegas multiplied by a thousandfold. 

The premiums paid to AIG were huge and the risk was negligible. 

The “powers that be,” which I’m sure included Hank Greenberg, never contemplated the collapse of the housing market. 

After all, I believe it was Ben Bernanke who said “subprime is contained.” 

When the “house of cards” finally did collapse, AIG’s ability to payoff on the CDSs was totally nonexistent. 

However, and this is the significant point, the majority of CDS holders were willing to negotiate for “cents on the dollar” since the same majority had participated but not to the extent that it threatened their existence. 

Nevertheless, Goldman Sachs and the other “too big to fails” did roll the dice in very dramatic fashion.  Any negotiations would have meant the end of the “great vampire squid” and the others, an unacceptable consequence to Hank Paulson, the ex-Goldman Sachs CEO and acting Secretary of the Treasury at that time. 

Therefore, henchmen, along with current Treasury Secretary Tim Geithner, were instructed to force AIG to not negotiate a settlement, but rather pay Goldman Sachs and the “too big to fails” one hundred “cents on the dollar.” 

After that, according to the plan, the government would step in and orchestrate the bailout of AIG.  Yet, here’s the real question: If AIG had simply paid “cents on the dollar” what would the financial landscape look like today? 

Yes, the lawsuit will occur and it will be settled, undoubtedly the government doesn’t want to air its dirty laundry and live through the events of 2008 all over again. 

Just remember the old saying “let sleeping dogs lie.” 

To Greta and the others, where was your outrage back then?

Update (1/9/13) @ 3:15pm ET: AIG refused to join the lawsuit — surprise, surprise.       

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