AIG, Alive Once Again, Is Now Swimming With Sharks

NEW YORK (TheStreet) -- The economy still is a big, fat stinker, with the job numbers for April showing continued pain in the heartland, with employers creating jobs at half the pace of last year.

Thank you, Wall Street, for creating the financial crisis that just won't stop hurting people.

Actually we don't have to thank the Street. Treasury Secretary Timothy Geithner is doing a simply terrific job in that department.

Is this man a master of irony or what? At the same time that the latest bad economic news comes out, Geithner shows that it's business as usual in the Wall Street-Washington Axis, as he doles out fees to every major Wall Street bank that played a role in the financial crisis.

It's a distinguished list of familiar names, among them the leading players in the run-up to the crisis and its aftermath: Goldman Sachs, Bank of America-Merrill Lynch, Citigroup, JPMorgan, Morgan Stanley, UBS, Wells Fargo, Barclays, Credit Suisse and Deutsche Bank. All you need to toss in are the defunct Lehman Brothers and Bear Stearns, and you can have a Financial Crisis Alumni Association right there.

What I've just listed are the main underwriters ("joint bookrunners" in Street parlance) of the latest public offering of American International Group stock, $5 billion of it, held by the Treasury Department, thanks to the 2008 bailout that rescued AIG from its derivatives addiction -- and with it, all of AIG's counterparties, notably Goldman Sachs.

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I guess we're supposed to let out a cheer that Treasury is slowly unwinding its ownership stake in AIG, which is now down to 63%. But the cheering may die down if you take a look at the final prospectus supplement for the deal, which was filed with regulators on Monday. All of the banks I mentioned, and others, are getting paid to sell this offering to the public.

Now, I hasten to say that it's not a lot of money by Wall Street standards. The total underwriting discount for the shares being sold to the public comes to a mere $11.25 million, or 0.114375 per share, which in turn is divided up a bunch of ways. Each of the main underwriters gets 14,366,617 shares, so $1,643,181.80 for each of them, while the small fry among the underwriters get only 655,737 shares apiece, which translates into a mere $75,000 each.

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