4876635Dismantling AIG may turn out to be a pretty lucrative venture for Wall Street banks and law firms, according to a Wall Street Journal report ($) Thursday.
Firms stand to get in the area of $1 billion in fees from the Federal Reserve to handle initial public offerings of spin-off companies and other transactions associated with selling off parts of the insurance giant, which is nearly 80 percent-owned by the government after receiving more than $100 billion in federal aid, according to the report.
That puts some of the very same banks that also got billions in taxpayer money in a position to profit from the government-supervised sell-off, raising possible conflict of interest questions. As the report questions, will the government implement stricter regulations – as it has pledged to - on banks that they are now employing?
"I'm confident we can separate the two" issues, a spokesman for the Treasury Department told the Journal.
According to the report, Morgan Stanley is one of the biggest beneficiaries of AIG-related business, standing to rake in a possible $250 million in various deals. Goldman Sachs, JPMorgan and Bank of America are taking part in deals as well.
AIG has two IPOs of multibillion-dollar subsidiaries in the works and is considering a third. All three IPOs could generate $570 million in fees, according to the Journal.
The Journal used fee estimates from deals already completed and potential future ones to arrive at a rough calculation.