AIG: Thank you, America -- and see you in court

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Commentary:

(MoneyWatch) American International Group's (AIG) board of directors is meeting today to decide whether it should join a lawsuit against the U.S. government over the $182.5 billion infused into the insurance giant in 2008 and 2009. Meanwhile, AIG is running an advertising campaign it dubs "thank you, America,"

In my view, this may yet turn out to be the best example of "no good deed goes unpunished."

Let me take you back to AIG's 2008 annual report, where it posted a $99 billion loss. This is not a typo -- that's nearly a tenth of a trillion dollars. How did such brilliant minds lose such a staggering amount? They bet the farm on insuring a kind of financial derivative called credit default swaps. By September 2008, AIG's stock had plummeted 95 percent, and its credit rating had plunged. 

AIG's access to capital had dried up, and I happen to agree with the Bush Administration's decision to inject taxpayer dollars into the company. Without TARP, we may be using the bartering system today.

AIG is not a victim of the financial crisis. To the contrary, they were perhaps the largest player in the short-term greed that created the crisis. As the financial crisis was worsening, I pointed out that my dog Max, awarded a plaque as America's top financial planner, made $99 billion more than the geniuses of AIG in 2008.

While I'm glad AIG repaid us taxpayers with a profit, let's put it in perspective. A $22 billion profit on a $182.5 billion investments amounts to a 12 percent rate over about a four-year period. In my book, that's a pretty good rate for a company that would have gone bankrupt without it.

In my view, we taxpayers should be the ones suing the AIG management that led us to the near financial collapse. Let there be no doubt, I will not be starting a marketing campaign saying "thank you, AIG."

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    Allan S. Roth is the founder of Wealth Logic, an hourly based financial planning and investment advisory firm that advises clients with portfolios ranging from $10,000 to over $50 million. The author of How a Second Grader Beats Wall Street, Roth teaches investments and behavioral finance at the University of Denver and is a frequent speaker. He is required by law to note that his columns are not meant as specific investment advice, since any advice of that sort would need to take into account such things as each reader's willingness and need to take risk. His columns will specifically avoid the foolishness of predicting the next hot stock or what the stock market will do next month.

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