Neil Barofsky’s report is out today and it says that the government gave away too much when AIG (AIG) went under.
I can’t say I’m surprised, nor can I claim to be terribly upset. To me, the mystery is that some folks actually expected the government to get it right.
What were they expecting? The policy was to throw as much money as possible at the problem and hope that it will work. Only UBS (UBS) (this Swiss??) agreed to take a haircut. Barofsky said that TARP will almost certainly lose money.
The lesson is that when the market panics, the government can panic just as well.
