zalo

AIG's Blackmail Note

By paying bonuses to the team that bankrupt the company, AIG is jeopardizing its future businesses by alienating the american consumer against them.

The american government has to speed up the divestment of the company into sub-parts. The government should hold the division that generates the systemic risk, while cleaning up the other businesses. Even if these last are not sold right away, they must be separated at once and have their names changed so that they don´t carry the AIG stigma.

The systemically risky division can then be have its management reestructured. Kick out those guys that have received bonuses unappropiately.

Paulson/Bernanke: $700 Billion at 'Hold to Maturity' Pricing

Alternative 1) The government should buy the troubled assets but pay for them with 100 years, non tradeable, treasury bonds. In this way the taxpayer will not feel the pinch.

Alternative 2) The government provides 50 year loans to the banks at treasury plus a lot. This loans can be used as regulatory capital.