US Treasury Secretary Hank Paulson has been under the spotlight once again after bailing out American International Group (AIG) today, proving bankruptcy was not an option. The deal gives $85 Billion to AIG and 79.9% control of the company to the US government. With “catastrophic” effects if AIG were to go down, does this make Hank a hero?
Time will be the determining factor on whether the governments role in intervening was correct but Hank Paulson has been the front man in several huge deals as of late. From Bear Stearns (BS) to already this week forcing Lehman (LEH) to declare bankruptcy, he has been without a doubt the “go to” man.
Breaking down the latest deal with AIG, 11.5% interest will be delivered to the government (the US tax payer) for its latest $85 Billion loan to American International Group (AIG) over the next two years. Considering the domino effect that could have proceeded if AIG wasn’t bailed out and the financial meltdown that has already taken place, a 11.5% return isn’t bad by any means.
Hank Paulson has significant experience coming from running Goldman Sachs (GS), and arguably is a far better leader than previous Treasury Secretaries John Snow and Paul O’Neil. Hank has announced though that he will be departing from his duties in the middle of January, 2009. Hopefully he extends his stay.
Here’s to you Hank for taking your job seriously and making decisions that put the American tax payer first.