Afterword to The AIG Bailout

34 Pages Posted: 4 Apr 2015 Last revised: 8 Apr 2015

See all articles by William K. Sjostrom

William K. Sjostrom

University of Arizona - James E. Rogers College of Law

Date Written: April 1, 2015

Abstract

In the early spring of 2009, I wrote an article on the federal government’s bailout of American International Group, Inc. (AIG) entitled The AIG Bailout (see http://ssrn.com/abstract=1346552). Many events related to the bailout transpired after that article was published. Hence, this Article serves as an afterword to it, detailing some of these post-article events. In that regard, the Article picks up where Part IV of The AIG Bailout left off. It describes the further restructuring of government assistance through the recapitalization of AIG, details the governments exit as AIG’s controlling shareholder, and considers U.S Department of Treasury’s claim of a $22.7 billion “overall positive return” on the AIG Bailout. The Article then delves into the Maiden Lane III transactions, perhaps the most controversial part of the bailout, pursuant to which Société Générale, Goldman Sachs, Merrill Lynch and other AIGFP counterparties were bought out at essentially 100 cents on the dollar. Finally, the Article examines the provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act, the principal federal regulatory response to the financial crisis, most relevant to what happened at AIG. Specifically, it considers how these regulations would have applied to AIG had they been in place prior to its collapse.

Keywords: AIG, bailout, credit default swaps, maiden lane, American International Group

JEL Classification: K20, K22, G8, G28, G38

Suggested Citation

Sjostrom, William K., Afterword to The AIG Bailout (April 1, 2015). Washington and Lee Law Review, Forthcoming; Arizona Legal Studies Discussion Paper No. 15-19. Available at SSRN: https://ssrn.com/abstract=2588871

William K. Sjostrom (Contact Author)

University of Arizona - James E. Rogers College of Law ( email )

P.O. Box 210176
Tucson, AZ 85721-0176
United States

Register to save articles to
your library

Register

Paper statistics

Downloads
163
Abstract Views
808
rank
182,457
PlumX Metrics