Dear AIG - I quit
Jake DeSantis, an executive VP at AIG, wrote this letter to the CEO Ed Liddy offering his resignation. I expect Liddy will be receiving many more like it as the business units crumble and are sold off for a song.
*Update*
One last thought. Let's assume we the taxpayers really "lost" $165 million in the whole AIG bonus affair. How much money is the government going to lose by TARP recipients prepaying funds because they no longer want the government as a shareholder? Well, the interest income alone to the government is 5%, on which the government is paying between 0% (if they simply just print money, which is what they are doing) and 2% (if you actually associated an interest cost for similar duration bond interest), resulting in net interest income of between 3% and 5%, or $300-500 million for every $10 billion prepaid. And that assumes no value in the warrants it receives. Seems to me this whole AIG affair is costing them lots of money without even looking at the potential value destruction at AIG itself.
*Update*
One last thought. Let's assume we the taxpayers really "lost" $165 million in the whole AIG bonus affair. How much money is the government going to lose by TARP recipients prepaying funds because they no longer want the government as a shareholder? Well, the interest income alone to the government is 5%, on which the government is paying between 0% (if they simply just print money, which is what they are doing) and 2% (if you actually associated an interest cost for similar duration bond interest), resulting in net interest income of between 3% and 5%, or $300-500 million for every $10 billion prepaid. And that assumes no value in the warrants it receives. Seems to me this whole AIG affair is costing them lots of money without even looking at the potential value destruction at AIG itself.
posted by Richie Rich | 9:54 AM
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