This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

The 5 Dumbest Things on Wall Street This Week: Jan. 11

1. AIG or $1 Trillion Coin?

What's dumber, a $1 trillion platinum coin designed to solve America's debt ceiling dilemma, or AIG (AIG) suing the same U.S. government that spent $182 billion to bail it out?

Oh, man, that's a tough choice even for us. And we do this for a living!

Let's start with the trillion dollar coin idea that bubbled up from online columns to the halls of Congress this week.

Under the scheme, the U.S. Treasury would employ an obscure commemorative-coin law to mint a single platinum coin with a trillion dollar face value and deposit it at the Federal Reserve. The government, as a result, would then have the collateral to buy back its Treasuries, giving Uncle Sam some extra headroom as he bumps up against the $16.4 trillion debt ceiling.

Rep. Jerrold Nadler (D., N.Y.) announced he was "absolutely serious" about the coin concept. On the other side of the aisle, Rep. Greg Walden (R., Ore.) said he would introduce a bill to block the Treasury from making such a move.

For our part, we just hope Fed Chairman Ben Bernanke doesn't mistakenly use the coin for a lunchtime game of Ms. Pac-Man because then it would really be game over for the country.

As for our good friends at AIG, well, we remember a time not too long ago when they were so desperate that they would have seriously considered such bullion chicanery to stay afloat. (By the way, the Fed won't accept $1 trillion bullion coins, signed baseballs or Sound of Music commemorative dishes as collateral unless Congress passes some wacky legislation, so the whole idea was asinine from the start.) Who can forget the massive hole the company dug itself into thanks to Joe Cassano's multibillion-dollar derivative bets, only to be saved by the government taking a 92% stake in the company?

Well, maybe the Department of Justice has forgotten since Cassano never went to jail or suffered a smidgen for his rogue trading sins. But that's not the point.

Anyway, the arrival of CEO Robert Benmosche in 2009 changed the entire trajectory of the company. After hitting rock bottom, the insurance giant has bounced back to prosperity. Shares of the insurer have risen nearly 50% in the past year and the company repaid the last of its bailout bucks in December. Uncle Sam didn't do so badly either, pocketing $22.7 billion on its rescue mission.

AIG's saga was indeed a shining example of a government bailout gone right. That is, until this week, when the ghost of AIG past popped up.

AIG's board was forced to gather this Wednesday to consider a lawsuit filed by former CEO Hank Greenberg (no relation to a certain Dumbest author) against the government over the terms of the bailout. Greenberg alleges that the government's bailout terms were usurious. The American public, on the other hand, denounced Greenberg's lack of gratitude.

Greenberg, if you've ever met him, doesn't give a crap what the public thinks. But, once again, that's not the point.

In the end, AIG's board made the sane choice and said it would not bite the hand that rescued it. Greenberg, alas, will have to sue the government without AIG's support.

Hmm. You know what? Don't throw away that trillion dollar coin just yet.

If Hank intends to take this all the way to the Supreme Court, as we think he might, he may need that coin to pay his legal bills.

Disclosure: TheStreet's editorial policy prohibits staff editors and reporters from holding positions in any individual stocks.
5 of 5

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 17,068.62 -2.60 -0.02%
S&P 500 1,972.34 -5.46 -0.28%
NASDAQ 4,494.3690 -11.4830 -0.25%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs