malapraxis1

AIG: Closing My Long Position

Is the situation with the Govt equity stake going to differ from precedence when they bailed out Chrysler and the airline industry.

Back when they bailed out the airlines they took warrants in America West alone for I believe 1/3 to 1/2 the companys value. Chrysler and the airlines all paid off their loans and the Govt. even cashed in all their America West stock at 9 dollars after exercising the warrants at 3.

Do we have any reason to believe the Govts equity stake here with AIG will differ from their moneymaking bailouts in the past. One would hope the position the Govt takes is one that promotes a payback of the credit and an appreciation of the stock price.

AIG: Closing My Long Position

The SEC filings don't even begin to address the issue of any agreement with regards to the Govt taking an 80% stake.
If the Govt. injected 85B for an 80% stake there doesn't then appear to be a need to set up a revolving credit facility. It can be one way or the other, but not both.

AIG: Closing My Long Position

There appears to be great disagreement on the Govts 80% stake. My reading is they get that stake only upon default of the loan.

AIG: Closing My Long Position

Wouldn't any private group attempting to put together their own AIG bailout package first want to wait to see what the Govt does first. If AIG risk is in insuring mortgages wouldn't you want to first see if the Govt first passes the 700B bailout and removes the risk of foreclosure on those mortgage assets. If they take that step, along with instituting CDS regulation wouldn't AIGs risk be greatly reduced and the company itself be a much more attractive investment. Why move on bailing out AIG privately, until after the Govt finishes up with their 700B bailout. I think if you believe the bailout passes, AIG looks pretty good.