The prospectus reminds us that "Merrill Lynch, Pierce, Fenner & Smith Incorporated and Citigroup Global Markets Inc. also acted as financial advisors to us in connection with the Recapitalization." (I wonder what that "advice" consisted of. "Call Tim Geithner"? ) The fees they received are not disclosed, but are described as "significant."
To compound the irony, AIG points out that it "has been conducting a comprehensive review of its dealings with the counterparties with which it did securities and related business before and during the recent financial crisis to determine if those counterparties harmed AIG by their conduct. These counterparties include a large number of financial institutions, including many of the underwriters and various of their affiliates."
AIG also says that it "has formally commenced litigation against one of the joint book-runners with respect to related matters." That's a reference to Bank of America and its Merrill Lynch and Countrywide Financial subsidiaries, which
last year for allegedly misrepresenting the quality of mortgage bonds AIG bought.
I guess just because you think a bank participated in a scheme to screw you out of $10 billion, as the suit contends, is no reason to deprive them of underwriting business or hiring them at "significant" fees to offer "advice." Isn't it wonderful how AIG isn't vindictive? I mean, I won't go back to a bakery if it sold me a crushed apple pie. These guys are saints.
Even so, and maybe I'm being overly uncharitable, but I think the question has to be raised. AIG must surely be faintly aware of the fact that it is owned by the American people. That being the case, why are the Wall Street banks that were instrumental in the financial crisis getting a single dime out of this stock offering?
It may not be a lot of money, but the symbolism stinks. Now, I'm not so naïve as to suggest that AIG gives a hoot about the symbolism involved. I mean, they're giving fees to people they're suing for $10 billion, for heaven's sake. But if they don't, I would expect that the Treasury Department would. Instead, the message that the long-suffering, job-bereft public is getting out of this is that Tim Geithner is tone deaf when it comes to the American people. As if we didn't already know that.