no wonder aig needed a bailout Richard Grenell February 25, 2011 Congress, Obama Administration, Politics When you get a $173 billion dollar bailout from American taxpayers you don’t have to worry about making good financial decisions – especially when Congress and the Obama Administration aren’t paying attention to what you’re doing. Ever since AIG got their enormous taxpayer bailout, they have been dragging their feet on paying back the money. In Taiwan, AIG has flailed repeated in what should have been an easy sale of its local insurance unit, called Nan Shan. Most recently, AIG inexplicably chose the low bidder in a deal that Taiwanese regulators may have to reject for the second time. This is no way to run a company, unless you aren’t worried about the bottom line because you are owned and backed by the U.S. government. The American taxpayer owns 92% of AIG but has no say in its decision-making process. Last year, AIG CEO Robert Benmoche said, “I’m confident you’re going to get your money back plus a profit.” But today, AIG remains one of the largest debtors under the TARP bailout program. The Taiwan example may be the perfect illustration for why they haven’t been able to pay the U.S. taxpayer back. As part of AIG’s original agreement with the U.S. government, it is required to sell off their assets. U.S. regulators assumed that meant they would sell them to the highest bidder. Since AIG is using our money, they have a responsibility to the American taxpayer to take the best price they can get, right? Well, not really. The financial wizards at AIG took the 4th highest price for their Taiwanese unit and left $800 million on the table. AIG’s incompetence is on prominent display in Asia — and the Obama administration and Congress seem not to care. In its first go-round, which began in May of 2009, AIG tried to sell Nan Shan to a consortium consisting of a battery manufacturer with operations in mainland China and a Hong Kong-based venture capital group. Included in the consortium were people with official positions bestowed by the Chinese Communist Party. Astonishingly, it didn’t occur to AIG that this might be a sensitive issue for Taiwanese regulators. The deal was announced in September of 2009 and rejected the following summer by overseers. But few people outside of AIG’s executive suite were surprised. Round two does not appear to be going any better for the bailed out company. Just last month, AIG chose a supermarket operator named Ruentex from 4 different bidders who wanted to buy their Taiwan business. You’d think AIG would prefer a finance company be owned by a company with finance experience, right? More stunningly, AIG reportedly left almost $1 billion sitting on the table—money that rightly belongs to U.S. taxpayers – in the deal. They reportedly passed over three would-be buyers, offering up to $3 billion for Nan Shan, in order to take a $2.2 billion offer from a company that sells more wontons than insurance policies. It’s no wonder AIG needed a bailout. The outcome, which surprised not only onlookers in Taiwan, but Wall Street analysts in New York, continues to defy serious explanation. AIG claims the Ruentex offer was the most credible and best overall. But the deal seems suspect. Obama’s Treasury Department and Congress should be asking some serious questions. But the Obama team hasn’t even instructed our de-facto embassy in Taipei to talk to the Taiwanese government about the U.S. interest the deal. This means, nobody is watching what AIG is doing. But since AIG is gambling with our money, someone in Washington should start asking some tough questions.