Some like to behave like children. You give a kid a cookie, and they are probably going to ask for more (at least I did). But sometimes, “grown ups” tend to act like children. They don’t seem to want to mature. And sometimes, it’s people like this that direct important financial institutions.
Say hello to A.I.G. They are acting like children, but it didn’t happen overnight.
The 2008 crisis was a disaster. It dragged Wall Street to the ground and looked like there was no recovery in sight. The Bush Administration stepped in and decided that it would be beneficial to bail out major Wall Street institutions like A.I.G. or else the economy would ultimately collapse.
A.I.G. is now mostly publicly owned. About 77 percent of A.I.G.’s assets belong to the government and come up to $186 billion. A.I.G. only owns about $14.9 billion of its shares.
It’s pathetic that such a powerful institution still hasn’t paid back its bailout money. Companies like these should not be part of the private sector in the first place. If A.I.G. couldn’t come up with the money in the last four years since the bailout, then it doesn’t deserve more money from the government and should be completely privatized.
The problem is that A.I.G. is not alone. Fannie and Freddie are other major financial institution that paid little of the money back. They took $187.5 billion and paid back $50.4 billion. Fannie and Freddie should be privatized and be left alone to fend off the market like every other normal company.
The most embarrassing part isn’t their incompetence or lack of profit, it’s their arrogance. A.I.G. took the money from taxpayers and now they have the audacity to consider a lawsuit against the government.
Maurice R. Greenberg, A.I.G.’s former chief executive, encouraged his shareholders to file a lawsuit against the federal government for preventing billions of dollars of profit from the company because of its state-owned status.
With all due respect to Mr. Greenberg, his company should’ve lost everything in the first place. If a company fails, then it fails. There is no reason why the government should nationalize a company that can’t make a profit. A free market system makes some businesses successful and bankrupts others. Those that go bankrupt are out of touch with the economy and don’t innovate to stay afloat.
Pan Am was one of them. It was the biggest airline in the U.S. and went bankrupt in 1991. The result wasn’t turmoil in the airline industry but a refreshing rise to new airlines. The deregulation of the 1980s brought more competition in the industry and it broke the all too powerful monopoly title that Pan Am held. The 1980s created new routes and lowered airfares.
It’s okay to fail. That’s why we have a free market system. Bailouts are not a good idea and A.I.G. made it pretty clear last week. Once they get something for free, they’re going to ask for more and get arrogant about it as well.
There should be no favoritism in the markets. There should be no subsidies — yes that includes subsidies for oil companies, projects of nationalization and/or bailouts. The bottom line is, greed shouldn’t be subsidized. The government should stay out of the business of propping up corporations and should focus on the common good of all. A.I.G. is not part of the common good.
So Mr. Greenberg, be smart and grow up. There is too much pain going on in this country to have to hear lawsuits that don’t make much sense. Be part of capitalism and learn to compete.