The New York Times scoops that AIG, recipient of a $180 billion bailout from taxpayers, will meet today to hear its former CEO Hank Greenberg argue why it should join his lawsuit against the federal government for not bailing it out generously enough.
Greenberg, unindicted co-conspirator in the giant fraud that led to his ouster in 2005, is suing the U.S., saying AIG shareholders’ Fifth Amendment rights against property seizure were violated. AIG’s board will hear his argument at a meeting today, but it seems most likely that this is a pro forma rear-covering exercise by the board..
“Rescued by a Bailout, A.I.G. May Sue Its Savior,” goes the NYT’s headline, emphasis on “may.” It’s hard to imagine that AIG would be stupid enough to actually do it. And the Times should have done a better job of pointing that out.
Reuters isn’t great on this either in its follow story, but it does at least report this:
Securities experts said AIG’s board needs to consider the matter as part of its fiduciary duty, but also said it was unlikely they will actually join.
Matthew Zeitlin of The Daily Beast is better.
The Times does get a sweet lede out of this, though:
Fresh from paying back a $182 billion bailout, the American International Group has been running a nationwide advertising campaign with the tagline “Thank you America.”
Behind the scenes, the restored insurance company is weighing whether to tell the government agencies that rescued it during the financial crisis: thanks, but you cheated our shareholders.
— The headline number on the giant mortgage-fraud settlements earlier this week by Bank of America and other banks is more than $20 billion.
But the U.S. Public Interest Research Group’s Phineas Baxandall points out that the government will likely receive much less than this because it lets companies write off such settlement costs on their taxes.
“Based on past experience, unless federal agencies expressly forbid it, these banks will write off the cost of these settlements as ordinary business payments and taxpayers will be forced to pick up a significant part of the tab. That could be the equivalent of giving a $4.06 billion tax subsidy to Bank of America and a $2.975 billion subsidy to the other banks that includes BoA. It’s a total of about $7 billion that will need to be made up for in the form of public program cuts, higher taxes or more federal debt.
“While the law clearly states that companies should not deduct government penalties, fines or settlements in lieu of those payments, corporations that negotiate settlements typically deduct them anyway — claiming that they are normal costs of doing business. In this case, the banks will likely also say that they can deduct the government-negotiated settlements because they are paid to private parties.
That’s worth watching.
— An architect of The Guardian’s online strategy now has doubts about his anti-paywall stance:
When I worked at the Guardian from 2001-2006, I was a fully paid-up member of the Make it Free posse. I even co-wrote a document (with my very clever colleague Stephen Dunn) entitled Guardian Everywhere, which postulated a strategy designed to make Guardian content available everywhere and anywhere, supported by advertising. We came up with the buzz-acronym P.A.D (Permanent, Addressable, Discoverable) to describe how we saw the Guardian as this completely open platform, its articles and photos and graphics available to all and sundry - accompanied, it was hoped, by a revenue-generating advertisement…
As more and more of these subscription services come along - and as more and more free, open services like the Guardian’s struggle against high costs and stubbornly slow-rising revenues - I begin to ask myself: was I wrong? Was Hepworth always right? Is the only way to make money off content to sell it, as near as dammit directly, to the consumer? Is there nothing to replace good old diligent, careful and skilful subscriber management?
I admit I don’t know. I’ve lost that old certainty. And perhaps that’s all that needs to be said. I’m back on the fence, waiting for proof either way.