Former AIG CEO Hank Greenberg has had plenty of nasty things to say about what he sees as government mismanagement of his once mighty empire. AIG’s slash-and-burn asset sales are finding only tepid interest in a global market struggling to keep its head above water. Michael Flaherty reports that only three potential bidders are still interested in a large stake in AIG’s $20 billion Asian life insurance unit, with the auction heading into its final week and hopes for a sale fading fast.
This should worry Citigroup shareholders concerned about the government’s intentions toward the bank. Reports are surfacing that Citi may sell its Japanese investment bank and brokerage as it looks to raise more cash from a sale of global assets. Having been taken to task for keeping the naming rights to the New York Mets’ new baseball park — something any big retail company might consider a reasonable marketing expense — Citi execs are reported scratching their heads, trying to figure out what hoops the government wants them to jump through. Markets hate uncertainty, so the current ambiguity about what Washington wants is particularly hard to stomach.
Like many a routine financial blog, DealZone has danced around the definition of nationalization. Reader Alan Macdonald argues we should refer to the process as “democratization.” Pundits are increasingly suggesting the process should be considered more a government receivership, which has a less onerous and deathly long-term tone than nationalization.
The Obama administration has resisted referring to what the government will do with the banks as nationalization. Addressing Congress last night, President Barack Obama said the goal of any government involvement in bailing out the financial sector must be to get lending going again. Presumably, he was not talking about the same lending market that supplied the financial amphetamines for the bubble that burst last year.
A few hours before Obama’s address, senators took taxpayer-funded Northern Trust to task over millions it spent at a golf tournament, so it’s obvious there are still a few political pounds of flesh to be rung out of the money industry. Perhaps the biggest problem facing the salvation of modern finance is the ambiguity of the political arena.