Too Big to Fail Banks Still Clawing Back
A little more than four years ago, Congress voted and approved the controversial Troubled Asset Relief Program, also known as TARP. The $700 billion “rescue plan” was passed on a second voting attempt in efforts to save Wall Street and the financial system.
The program was voted on once before by the House of Representatives on September 29, 2008, but failed by a vote of 205 to 228. The Dow Jones Industrial Average plunged nearly 800 points on that day, leading to a near identical TARP package being passed on October 3, 2008 by a vote of 263 to 171. While the blue-chip average still fell off a cliff and eventually reached rock bottom at 6,705 on March 3, 2009, the index has reversed its losses to recapture the 13,000 level.
However, some of the largest financial entities to receive bailout funds have yet to recover their stock losses, as investors still remain skeptical of the battered and artificially propped up financial system.
Here’s a look at the most recognizable bailout recipients and their stock performance:
American International Group (NYSE:AIG):
Once the world’s largest insurer, AIG received one of the most debated bailout packages of the financial crisis – $182.3 billion from the New York Fed and U.S. Treasury. Most recently, the company is known for seriously thinking about joining a $25 billion lawsuit against the U.S. Government, which was filed by former CEO Maurice Greenberg. The lawsuit accuses the government of constructing an illegal and inequitable bailout.
The New York Times reports, “The choice is not a simple one for the insurer. Its board members, most of whom joined after the bailout, owe a duty to shareholders to consider the lawsuit. If the board does not give careful consideration to the case, Mr. Greenberg could challenge its decision to abstain.”
AIG shares logged a 52 percent gain last year, but still need to double its current price to reach 2008 levels.
Other banks also have their work cut out for them…