April 20, 2009

Backdoor socialism - ask Rick

Is this Government as investor or is it backdoor socialism?

NEW YORK (AP) -- American International Group Inc. completed a sale of preferred stock and issued warrants to the Treasury Department as part of a previously announced plan to receive additional financial support from the government according to a regulatory filing submitted Monday.

New York-based AIG said in the Securities and Exchange Commission filing that it sold preferred stock and issued warrants to the government on Friday in exchange for $29.84 billion. The new funds are now immediately available for AIG's use.

The additional funding was announced last month when AIG disclosed a fourth-quarter loss of $61.7 billion, the largest ever quarterly corporate loss in U.S. history.

As part of the deal, AIG must avoid bankruptcy and the government must remain the majority owner of the insurer. The agreement also restricts AIG's ability to
repurchase stock and requires limits on corporate expenses, lobbying and
executive compensation.

Government investment, backdoor socialism? That depends. Ask Rick Wagoner and see what sort of answer you get.

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