The AIG Dodge

Elizabeth Warren Explains how AIG is hosing us taxpayers-- who are the only reason they have a company while-- avoiding paying corporate tax on $19.8 BILLION in profits. A US government committed to not picking winners and losers should follow Warren's advice and address this absurd giveaway immediately. When I see either Tea Party or Republicans stand up for fairness here, well, ah, forget it. Hell will have frozen over.

According to Warren the US treasury loaned AIG $182 billion. Forbes disputes that amount but still puts the total at something approaching $86 billion with a f***ing “B”! Much of the difference is made up with monies set aside for credit insurance where the US government makes loan guarantees, or direct investments in AIG stock. The US taxpayer is still AIG’s largest stock-holder, and so does gain some benefit ironically from these tax breaks. $40 billion of the finds made available to AIG was done in the form of an investment in preferred stock which was supposed to pay a 10% dividend, but for some reason the US government has negotiated that benefit away.

Projections of the amount the AIG bailout will cost US taxpayers still run to the tens of billions. Bailout of AIG came about as a result of the whole shell game of credit default swaps and collateralized debt obligations. In essence, AIG offered-- for very substantial fees-- to insure the wildly speculative bets the big Wall Street firms and International banks were making in bundled packages of American mortgages. When the housing markets slowed and began to sour in 2007 and 2008, the banks initially took the hits, and eventually claims flowed back to AIG which essentially guaranteed through the insurance they provided that those hits would not be too extreme. AIG had to be propped up because their failure would have meant the failure of every major Wall Street firm and every major bank.

In gratitude, AIG is using legal dodges to boost profits and avoid paying taxes. Even so, most do not believe the government will ever recoup the investment which was made to rescue the company and the American economy.

http://www.washingtonpost.com/opinions/aigs-past-losses-cost-taxpayers-now-and-into-the-future/2012/03/29/gIQAI8ssjS_story.html?hpid=z3