As a human being with an instinctive fondness for round numbers, I was a bit puzzled by the government's purchase of a 79.9% equity stake in AIG. But Steven Davidoff explains the situation: "The government purchases 79.9 percent of the company in question. It can’t be more than that, because if it goes over the magical number of 80 percent, the company’s debts are then required to be consolidated onto the federal government’s balance sheet. Keeping it at 79.9 percent allows the government to maintain the fiction that it is still not responsible for the company’s solvency." Additionally, what the government bought was, in essence, stock-once-removed. They got warrants that can become stock. This preserves the fiction that they don't own AIG, though the difference here is is the difference between me buying your house and moving into it and me buying your house and letting you live there until I change my mind.
