First of course was ass covering. It's much easier to manage the potential public outrage, if you have a choke hold on the source.
And worse. You can cover up who is getting saved, i.e. the counterparties and their potential weaknesses. Team Obama wants to use AIG and others as a clearing house system, but with the wrong criteria. They want to save the investment schemes, including the exotic derivative^(derivative) sets.
I would do just the opposite with AIG et al as the clearing house system. Save the claims coming from public sector players like state, county, and city governments, public universities, quasi-public pension funds, utilities, and so forth---under the rational of augmenting the infrastructure simulous plan. In turn, weed out the investment exotica with extreme sanction. I would take greatest pleasure in health insurance companies who came calling.
If any of the counterparties came in with audits to prove they will go broke without their claim, you could make them an offer they couldn't refuse. (This was the whole point to my Don Corelone rift a week or so ago.)
To quote something I previously quoted and Dennis just reposed on another thread:
"Hey, you know, if we're going to own the banking system, why not make the decisions and make them in alliance with social policy that ensures that housing's affordable, that school loans are affordable, that small business gets credit?" You know, why not turn the banking system into a public utility? ..." Mike Davis