Thursday, August 06, 2009

Lay down with dogs... 

...and it'll cost you a billion to get rid of the fleas.
Wall Street banks and lawyers could collect nearly $1 billion in fees from the Federal Reserve Bank of New York and American International Group Inc to help manage and break apart the insurer, The Wall Street Journal said on Wednesday, citing its own analysis.

Morgan Stanley could collect as much as $250 million, the newspaper said, citing banking experts and documents released by the New York Fed.

Bank of America Corp, private equity firm Blackstone Group LP, law firm Davis Polk & Wardwell LLP, accounting firm Ernst & Young, Goldman Sachs Group Inc and JPMorgan Chase & Co are among others that have or could get big paydays for helping dismantle AIG, the newspaper said.

You'll no doubt note the numerous TARP recipients on that list. But if the government owns 80% of a company and wants to break it up, it probably doesn't have its own mergers and acquisitions department. Nor should it. Still, it's one of those little surprises that will continue to haunt the government that decided to support AIG rather than let it fail.

To put it in context, market capitalization for the company is $3.18 billion. The government owns 80% of that, or $2.54 billion.

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