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Wall Street Rakes in $1B in Fees on AIG Breakup
Morgan Stanley set to pocket $250M in 'advisory services'
By Jason Farago
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Posted Aug 6, 09 7:18 AM CDT
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(Newser)
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The crumbling of AIG forced taxpayers to take on 80% of the company, but breaking the insurance giant up is turning out to be a bonanza for lawyers and banks. The Wall Street Journal calculates that firms will pull in $1 billion in fees from AIG and the Fed—one of the biggest paydays ever, four times larger than the breakup of AT&T. Among the biggest beneficiaries is Morgan Stanley, which stands to make as much as $250 million.
Morgan Stanley is billing $4 million upfront plus $2.5 million a quarter for "basic advisory services," and banks such as Goldman Sachs and Bank of America have also billed $75 million to the largely public-owned insurer. AIG has been preparing two IPOs for subsidiaries and, once they go public, may have to sell off its remaining stakes to pay the government—which will generate tens of millions in further fees.