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I'm going to preface this article by telling you that I am not an economist, nor do I fully understand the economic reasons behind our government propping up Citi Group and AIG. However, I think the world and the American people are finally ready for the fall of Citi and AIG. When AIG was first bailed out, it followed weeks of generally surprising news of collapses of Bear Sterns and Lehman Brothers, and basically the collapses of Wachovia and Washington Mutual. At that time, if two of the largest financial institutions in the world collapsed, there would have probably been near Armageddon panic.
But I think that the American people are ready for these Baby Hueys to collapse. How many people really like using Citigroup or AIG? As an insurance agent, I can speak from personal experience that I didn't like working with Travelers Insurance when they were part of Citi, and for the most part, I avoid working with AIG, with a few exceptions. The big problem with AIG is that they insure things that no one else does, or seems to want to. However, the insurance business has been profitable for AIG, so I cannot imagine that someone like a Berkshire Hathaway Company wouldn't come in, and either buy the AIG book, or even better, offer an alternative in AIG's marketplaces.
A lot of people don't really understand this part of the AIG issue. AIG insures a lot of higher risk endeavors. I can mainly only speak to Florida insurance, but here they are one of the best carriers still writing high valued homes with hurricane insurance coverage all over the State. They are also my only option to write USL&H (United States Longshore and Harbor Workers Act), as well the only market I can get to write high risk workers compensation including 24-hour emergency restoration services and Aviation industry. They are also one of the main players in a not very competitive aviation insurance industry.
That all being the case, I still think it is finally time we said good riddance to AIG and CitiGroup. No more bailouts for bad companies, the American people are ready, we know things suck now and we expect them to get worse. Let's speed it up, the faster these invalid companies crash the faster we can recover. So next time they need money, we need to count to ten, and rip off the band-aid.
