Do you feel good about $173 billion of your tax money helping to keep American International Group (NYSE: AIG) from going bust? If you made the decisions that put AIG at death's door you might be. But the odds are pretty good that you had absolutely nothing to do with AIG's failure and received not a penny of compensation during the time when its executives were reporting profits -- and getting millions in compensation that they're not paying back now that it's losing money.
That's one of the reasons why I was arguing on KCRW's To the Point that the U.S. ought to disclose who is getting the taxpayer money that goes to AIG. After all, they just got another $30 billion this week after reporting history's biggest quarterly loss of $61 billion. A professor on the program suggested that we should not disclose the names of the recipients because it would threaten the stability of the financial system. I thought this professor's argument was unpersuasive -- and now we'll get a chance to see who was right.
That's because the Wall Street Journal just disclosed the names of the banks who got some $50 billion of the AIG bailout money. And as suspected, Goldman Sachs (NYSE: GS) was among the biggest recipients ($6 billion). This is noteworthy because Goldman got that money from our 74th Treasury Secretary, Hank Paulson, who was a former Goldman CEO and held plenty of its stock. So he was using our money to bail himself out! Here are the others (including 10 European banks):
- Deutsche Bank
- Merrill Lynch
- Société Générale
- Royal Bank of Scotland
- Banco Santander
- Morgan Stanley (NYSE: MS)
- Bank of America (NYSE: BAC)
- Lloyds Banking Group
On Monday we'll have a chance to see whether the global financial system collapses now that we know who got our money. My hunch is that our system will survive this disclosure. The more interesting question is: 'Why there was so much fear of disclosing these names and the others which the Journal could not get its hands on?' Could it be that politicians have not figured out how to explain that so much U.S. taxpayer money is going to bail out the mistakes of foreign bankers?
Peter Cohan is president of Peter S. Cohan & Associates. He also teaches management at Babson College. His eighth book is You Can't Order Change: Lessons from Jim McNerney's Turnaround at Boeing. He owns AIG shares and has no financial interest in the other securities mentioned.