AIG wants a bridge loan from the Fed–and it is turning down private equity in order to preserve its existing management.

During a weekend scramble to shore up its finances, AIG turned down a capital infusion from a group of private-equity firms led by J.C. Flowers & Co. because an option tied to the offer would have effectively given them control of the company, an 89-year-old giant that does business in nearly every corner of the world.

What exactly is the taxpayer stake in AIG’s survival under its current management? The Wall Street Journal is right today: Treasury secretary Henry Paulson was right to refuse a bailout to Lehman Brothers. There should be no bailout for AIG, either.

I write about this looming outrage, and how McCain should respond, at the Washington Post online today.