AIG Banks On Its Enemies for IPO

American International Group has picked the investment bankers for the initial public offering of its Asian life insurance unit, American International Assurance, according to the Wall Street Journal.
Among the chosen: Goldman Sachs, which helped push AIG to the brink of disaster in 2008, and Bank of America, Merrill Lynch, UBS, and Deutsche Bank. All five of these banks demanded to be paid off, ultimately with taxpayer money, after the September 2008 AIG bailout. Now they stand to make at least $300 million from the proceeds of the IPO if it goes off at $10 billion and substantially more if it reaches $20 billion, according to published reports.

After the $182 billion government infusion of AIG, Goldman, Bank of America, Merrill (now owned by BofA), Deutsche Bank and UBS wanted full repayment. According to a November 2009 report by Neil Barofsky, the Special Treasury Department Inspector General overseeing much of the federal bailout, these banks played hardball. Only UBS consented to take a 2 percent "haircut" on its AIG payback, and only if the other banks did the same. They didn't; all were paid back in full.

Now AIG is giving these banks, along with five others, a second bite of the apple. Ironically, the one major bank that didn't stiff AIG, JPMorgan, is out of the running after a dispute with the insurer. Not only does no good deed go unpunished, but apparently no bad deed goes unrewarded.