We do NOT own AIG. We are lending them money and could actually recover 8-12% interest. I thought we brought this out last week and it was confirmed?
Now Freddy and Ginny is a different bag. We will own them.
Sorry, you are not correct. We got an 79.9% equity stack for the $85B loan at 12%. That is why the stock went down. The common got diluted.
http://calculatedrisk.blogspot.com/2008/09/fed-aig-deal-done.html
If you want I can explain this in technical detail. But the government has a 79.9% equity stake in AIG, Libor plus 8% note, and the ability to cramdown the debt. It is a sweet deal. I see about a hundred deals every year and this one is better than anything I have seen before. The AIG share holders should be screaming.
Plus we will probably not recover the interest on the whole $85B because this is actually more of an LOC. I’m telling you we own AIG less 20.1% and it is a bargain. Not that I like to see the government competing with the likes of Bain and York but if you had to do a deal this is the one to do. And the best part is the debt is probably going to turn out to be CDSs which are a lot easier to cramdown than the underlying MBSs.