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Aig Bailout Essay

812 words - 4 pages

Should the Government have bailed out AIG in September 2008?

In my opinion, the Government in 2008 made a mistake in bailing out AIG, a company that was headed for bankruptcy and financial ruin because of its own mistakes precipitated by the greed and mismanagement of its own company executives and directors. By bailing out AIG, the Government has also set a dangerous precedent in providing the private industry the image that if your company is “too big to fail” then the American Government will step in with taxpayers money to rescue the company. The American free enterprise system was based on a free market where well managed companies will flourish and the inept ones will go out of ...view middle of the document...

I believe that the general public thinks that by the Government bailing out AIG, it has implicitly condone this type of corporate mismanagement.

The question and the article though does pose an interesting perspective. While I am of the opinion that the Government was wrong in bailing out AIG and that certain executives and directors of AIG were acting irresponsibly, I am not sure that it amounted to criminal misconduct. AIG and Joe Cassano saw an opportunity to make money in a part of the American banking system (credit swaps, derivatives, etc) that was exposed and unregulated. It was a bad business decision but was it criminal...i think not. We will continue to have such unwise business choices being made in the corporate world but it is important that the Government let the consequences and free market play out.

Do you think there is an ethics issue regarding the bailout from the standpoint of AIG, the Federal Government, Regulators and Rating Agencies?

I do believe there was an ethics issue regarding the bailout with a number of players involved. Certainly, as mentioned above, AIG itself was unethical in many ways starting with taking advantage and making huge profit intially of an unregulated area of the banking market and then making deceptive statements in an attempt to hide its weak financial position. Ethically, individuals within AIG should be held accountable for a number...

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