Honest Answers about the Financial Collapse

Deregulation, Disaster, and What Happens Next
Filed under Uncategorized

There was Maurice “Hank” Greenberg on Monday, the former wheeler-dealer who once led the world’s largest insurance company, all over the newspapers saying that the United States government needed to give AIG $85 billion in public money as a “bridge loan.” Yup, that’s the same guy who in 2005 was at the center of a corruption investigation by federal and state prosecutors that included complex kickback schemes between AIG and various off-shore “entities” the company effectively controlled. Back in 2005, Hank castigated the federal government in an interview with the Wall Street Journal, complaining that “you couldn’t build an AIG today” because of, as the WSJ described it, “overbearing regulators, new corporate governance rules, protectionism, a failing tort system, prosecutors unleashed.” Greenberg told the WSJ that “‘one of the biggest problems’ facing America’s competitiveness at the moment ‘is regulation.'”

Not long ago, a retired California judge told me how Hank Greenberg had bitterly complained to him that Proposition 103 – the law I wrote that stringently regulates the rates and practices of insurance companies – got in the way of AIG raising insurance premiums. Greenberg is one of those guys who could not abide any form of government intervention in the “free market.” Or was.

Yesterday, of course, Hank needed the government. And today, he’s laughing all the way to the bank. Last night, the Bush Administration granted Hank’s wish and agreed to give $85 billion of taxpayers’ money to the private insurance company. Though Greenberg was forced out of AIG in 2005, he still controls 243 million worth of AIG shares that would have been worth nothing were it not for the government’s “protectionism.”

So, with this inaugural blog post, I ask, for what will be the first of many times, this question: What’s in the AIG bailout for the average American whose money is going to be spent to keep Greenberg and countless other Wall Street fat cats fat? We just bought AIG. How about a “bridge loan” for the tens of millions of Americans whose modest investments and home values have evaporated over the last year because of the shenanigans of companies like AIG?

Comments Off on “Bridge Loan” to Nowhere for AIG Posted by Harvey Rosenfield on Wednesday, September 17th, 2008

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