AIG makes me angry too

The more I read and think about AIG, the closer I get to having a conniption. Even Bernanke said it yesterday: nothing makes him angrier than the way AIG has been run. He admitted this insurance company was operating like a hedge fund. So, as Barry Ritholtz asks this morning, why are the taxpayers making good on hedge fund trades gone bad?

I also enjoyed reading investment advisor Mike Shedlock's take on AIG. He calls to task Bernanke's argument that letting the whale fail will make things worse:

There is no need to prevent another Lehman. Instead, there is precisely a need for more Lehmans. The sooner we stop trying to prop up failed institutions, the sooner the economy recovers.

As I said in a post a couple weeks ago: "I'm afraid we're forgetting how to draw lines. Paulson drew one (with Lehman), and it backfired. That doesn't mean every line we draw will wreak havoc." Maybe with Lehman, it was the timing. The government has pumped so much money into the financial system since then, it has to be in a better position to withstand failures. Maybe now, as Shedlock says, the government needs to let the system heal. Ask any successful entrepreneur about failure and what it meant to their success.

As for AIG, to make matters worse, there's another story today that the company is still paying four public relations firms. Is that as bad as a bailout recipient taking clients to a golf tournament? I don't know, but as DealBook points out, the taxpayers aren't getting much in the way of public relations:

Despite a series of outsize bailouts, the company has given little clarity on taxpayer losses to date, or provided much communication directed toward taxpayers at all.
Then again, maybe that means that from A.I.G.'s perspective, its public relations army is worth every penny.

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