On Saturday, the Wall Street Journal publishes AIG Holders Seek Alternative to U.S. Plan .
“Shareholders who are dissatisfied with the deal [the Fed’s $85 billion] are exploring ways to quickly pay off the loan, which gave the federal government the right to take 80% of the insurer. Under this scenario, AIG would not only sell assets, but also raise capital in other ways, potentially leaving shareholders better off. AIG had no choice but to accept the federal help last week, when large sums of private money weren't available.” Well, that is exactly what they are doing. On Monday, the Globe and Mail publishes Manulife in talks for AIG assets. Manulife Financial Services, the largest insurance company in Canada and well-represented in the U.S., buying out John Hancock Insurance in 2003, is in talks to acquire a stake (the size is not specified) in American International Group (AIG). With such a presence across the U.S. and Canada, “Buying all of AIG, or big parts of it, would propel Manulife to the top rank of the global financial services industry.”
This is just a sad preview of what’s to come: the U.S. has (is) socialized the losses and privatized the gains. The Fed already made payments to AIG’s balance sheets; hence, taxpayer money has already been drowned. But if AIG sells of its assets, especially at a fair price, shareholders will make out, having avoided chapter 11 and earned a hefty sum from a potential suitor. All before the Fed acquires its 80% stake.