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Posted: June 2, 2011 6:23 p.m.

Durusau: AIG questions remain unanswered

The sale of 200 million shares of AIG stock by the U.S. treasury in late May was reported to have made a "small profit." There are a couple of things about that sale and the U.S. ownership stake in AIG I find puzzling.

First, the U.S. owned 92 percent of AIG before the sale. That makes the government the majority shareholder. I was under the impression that the majority shareholder elects the board of directors, who in turn choose the CEO, etc. So, when the top managers at AIG started paying themselves bonuses with taxpayer bailout money, why didn't the U.S. change the board of directors, who would in turn fire the CEO. Their replacement could take appropriate action against those bonus-seeking managers.

Isn't that what majority shareholders do? Run the company for the benefit of themselves, which in this case would be on behalf of the rest of us?
Second, why do we need AIG's agreement on a sale of stock?

We are the majority shareholder and it is our consent that AIG requires, not the other way around.

AIG was almost managed into the ground, largely by people still employed at AIG, and rescued by the government just minutes before bankruptcy.

Third, we made only a modest profit on our sale of stock. Why not treat the stock as long-term investment? If the company turns around and becomes very profitable, then the taxpayer will be getting stock dividends every year. Another revenue stream to help pay down the national debt.

For all the talk of fiscally responsible government, shouldn't include its investments and not just its deficit?

Patrick Durusau is a Covington resident whose columns run on Fridays.

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