AIG has been owned by you, the taxpayer, for almost three years.
Now the federal government is hoping to unload some of that ownership on you, the investor.
The difference? For three years, you've been forced to own AIG.
Now you can choose to do so.
AIG got into trouble because it provided credit default swaps on collateral debt obligations, and if you still don't know what those are, you're not alone. Basically the company provided insurance to cover defaults for securities based on a portfolio of loans or bonds.
And default they did.
Turns out everyone was pretty much making make believe trades in make believe products, and when it became clear some real money was demanded, AIG was left holding the bag...which didn't have enough money in it.
Sounds childish in hindsight, doesn't it? Sounds like something a baby might do, yes? Turns out a baby did do it — the E-Trade baby — at least according to CollegeHumor.com. The comedy crew there created a very funny spoof of the famous E-Trade spokesbaby, who admits that as he traded asset backed securities and CDSs, "I don't even know what half this stuff means...wait, why is this line going down?" When the market tanks, the baby engages in potty mouth, before announcing, "I just lost my entire life savings." Hey, you're a baby. What can your life savings be?
At least you have an excuse for not knowing any better. You're A BABY. AIG...not so much.
