AIG: Private Sector Revolt?

A really interesting e-mail from the WSJ:

NEWS ALERT
from The Wall Street Journal

Sept. 19, 2008

Major shareholders are pursuing an effort to try to help pay off the federal governmen’s loan to American International Group Inc. in time to avoid having Washington take an 80% stake in the company, according to a person familiar with the matter.

Hurdles to these shareholders’ efforts could be high, as they and other investors they may attract would have to put up significant sums. This week, the government agreed to lend AIG up to $85 billion to help it avoid possible bankruptcy, in exchange for a right to take a controlling stake in the giant insurance conglomerate.

This is FASCINATING stuff. There are some strange parallels to past events, like a familiar drama where the cast has been totally reshuffled. The conflict is a fuzzy analogy to the hostile takeover binge of the 1980s. This time around, the U.S. Government is playing the role of the barbarians at the gate, threatening to take over wide swaths of underperforming assets and equity, while private sector shareholders are playing the role of the besieged, just as executives and boards did when the barbarians were running amok. A really interesting wrinkle in this episode is that the Secretary of the Treasury is also one of those disgruntled private shareholders.

Is it even remotely possible that these folks could pony up $85B? Two to three years ago they probably could have pulled it off. But the credit well looks awfully dry these days…