American International Group, commonly known as AIG, has been in the media since the middle of 2008. According to the 2008 Forbes Global 2000 list, AIG was the 18th-largest public company in the world. Most of AIG investments are tied directly to the US real estate market. AIG used mortgage backed securities to build momentous wealth.
As the real estate bubble berthed, AIG found its self in very unfamiliar grounds. AIG’s net worth shrank pulling the stock value below the $5 mark causing dire consequences for them. Under SEC and IRS rules, most pension funds had to withdraw their capital which caused AIG stock to drop even lower.
For over 5 month now, AIG has been surviving through direct funding from the US government. Both the Bush and Obama administrations have pumped over $300 billion to keep AIG afloat. In exchange, AIG promised to revise their operations in order to afford paying back the government.
During the past weeks, public opinion expressed anger over the AIG bail out. The rage was driven by leaked news showing “bonuses paid” to about 30 executives at AIG. Both democrats and republicans expressed their anger and disappointment. Seeing the need to calm public opinion, President Obama said he will “take responsibility”.
Yielding to the demands of the public, the lower chambers of the US congress passed a tax bill to be attached to the AIG bail money. The White House came out strongly against such measures. Featured in the CBS news program ’60 minutes’, President Obama called the new tax bill as “targeting special people”.
Benjamin Franklin once stated that: “All human situations have their inconveniences. We feel those of the present but neither see nor feel those of the future; and hence we often make troublesome changes without amendment, and frequently for the worse.” In our age of advanced technology, our economy is intertwined with the entire world and true balance is required. To see our hard earned tax dollars given to the ultra rich is extremely disturbing. Our ideologies of capitalism have been compromised.
Our government has made radical decisions in “handing out” money with no accountable measures in place and no true due diligence. Is this not the same irrational decision making that led our lending institutions (and entire country) to the verge of dissolution?
Mr. John Habashy is a California Attorney, and a graduate of USC. His has extensive experience in distressed real estate and finance. He welcomes your remarks or legal questions at info@stopbanks.com or feel free to visit our website at: www.stopbanks.com
No comments:
Post a Comment