Eli Broad, a former director and shareholder of AIG who joined other investors last year to hatch a plan to reclaim the insurer from federal ownership, said he has thrown in the towel.
American International Group Inc, once the world’s biggest insurer, had to be bailed out by the U.S. government last September after losses on bad mortgage bets. In exchange, taxpayers got roughly 80 percent ownership, heavily diluting the stake of shareholders.
“If you look at what has happened, I think it is too late,” said Broad, in an interview late on Monday.
“There were all these additional costs” from the federal bailout, which initially carried a heavy interest burden, said Broad. And, “a lot of good people left, and they were trying to sell units,” irking customers who did not like the uncertainty, he added.
AIG last week reported a record $61.7 billion fourth-quarter loss, and received new assistance from the U.S. government after a plan to sell assets to repay debts foundered.
The U.S. said it will keep pumping cash into AIG as needed because of the threat to trading partners from a collapse. It has already put up to $180 billion at AIG’s disposal.
AIG ran into a cash crunch after market declines and rating downgrades required it to post large amounts of collateral to counterparties of credit default swaps written by a financial products unit.