What does AIG have in common with the auto industry? Beyond bailouts, of course. One answer is that public shareholders are really part of the problem, rather than part of the solution.
In a publicly-listed company, management works, first and foremost, for shareholders. At AIG, the incentives are even more skewed: the CEO, Edward Liddy, is working for $1 a year -- plus a large slug of equity.
And so we end up with a situation where Liddy wants yet another AIG bailout, this one to reduce the amount of interest that the company is paying to the government, leaving more money for shareholders. It's similar to GM's protestations that bankruptcy is not an option -- but management would say that, because they work for shareholders, and shareholders would get wiped out under any bankruptcy proceedings.
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