The 5 Dumbest Things on Wall Street This Week: Jan. 11
1. AIG or $1 Trillion Coin?
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.
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