Fed Bails out AIG

[Ldlane]

Here we go again paying for another failed business! Nothing like "white-collar welfare"!

NEW YORK (CNNMoney.com) -- In an unprecedented move, the Federal Reserve Board is lending as much as $85 billion to rescue crumbling insurer American International Group, officials announced Tuesday evening.

 

[Bamaro]

I wonder what the CEOs golden parachute is worth?

 

[bamanut_aj]

great. I'm just gonna quit working, quit paying my bills and wait for my own bailout.

 

[Tide n True]

Hey, but on the upside, we now own 80% of a worthless company! YAY!

 

[bamahuey1]

Hey, but on the upside, we now own 80% of a worthless company! YAY!

The 80% the government is holding is collateral. AIG is getting the loan at 11.5% I can't think of a wefare program that works like that!

The move was similar to government's seizure on Sept. 7 of mortgage giants Fannie Mae and Freddie Mac, where the Treasury Department said it was prepared to put up as much as $100 billion over time in each of the companies if needed to keep them from going broke.

The Fed said it determined that a disorderly failure of AIG could hurt the already delicate financial markets and the economy.

It also could "lead to substantially higher borrowing costs, reduced household wealth and materially weaker economic performance," the Fed said in a statement.

The decision to help AIG marked a reversal for the government from the weekend, when it refused to use taxpayer money to bail out Lehman Brothers Holdings Inc. Lehman, which filed for bankruptcy protection Monday, collapsed under the weight of mounting losses related to its real estate holdings.

The White House said it backed the Fed's decision Tuesday.

"These steps are taken in the interest of promoting stability in financial markets and limiting damage to the broader economy, " White House spokesman Tony Fratto said.

After meeting with Treasury Secretary Henry Paulson and Fed Chairman Ben Bernanke in a late-night briefing on Capitol Hill, Congressional leaders said they understood the need for the bailout.

"The administration is approaching an unprecedented step, but unfortunately we are living in unprecedented times. Hearing of these plans, you have to stop to catch your breath. But upon reflection, the alternatives are much worse," said Sen. Charles Schumer, D-N.Y.

In a statement late Tuesday, AIG's board of directors said the loan will protect all AIG policy holders, address concerns of rating agencies and buy the company time to sell off assets.

http://news.yahoo.com/s/ap/20080917/ap_on_bi_ge/aig

 

[TexasBama]

The 80% the government is holding is collateral.

The collateral being held against what assets? Warm handshakes?

 

[Displaced Bama Fan]

I wonder what the CEOs golden parachute is worth?

More than most of us will ever make in a lifetime unfortunately. These guys should be shot and all their personal assets seized.

 

[Displaced Bama Fan]

The collateral being held against what assets? Warm handshakes?

Property in Galveston.

 

[bayoutider]

Here we go again paying for another failed business! Nothing like "white-collar welfare"!

Wait a minute, I thought only the liberals wanted to give everyone a free ride? It's looking like the gap between the left and the right is becoming a hairline crack.

 

[ValuJet]

These criminals may claim to be conservatives because they don't want to have their personal income slammed into a higher tax bracket.

When it gets right down to it, the principals they hold are rooted in one thing - personal greed.

I sort of agree with what DBF said. Banks, insurance companies, mortgage companies - put them all in a pot and it becomes one nasty soup.

 

[Displaced Bama Fan]

These criminals may claim to be conservatives because they don't want to have their personal income slammed into a higher tax bracket.

When it gets right down to it, the principals they hold are rooted in one thing - personal greed.

I sort of agree with what DBF said. Banks, insurance companies, mortgage companies - put them all in a pot and it becomes one nasty soup.

I guess there was some logic for keeping many of them separated for so many years. Still the utter greed is despicable.

 

[Mamacalled]

And people wonder why I have become so skeptical about our countries future.

 

[TexasBama]

I thought greed was considered a virtue if you're a Republican.

 

[Displaced Bama Fan]

I thought greed was considered a virtue if you're a Republican.

I haven't considered myself a Republican since 1996.

 

[TexasBama]

DBF, you lost your illusion about the same age I lost mine

 

[It's On A Slab]

DBF, you lost your illusion about the same age I lost mine

March 20, 2003 was the breaking point for me.

Though I didn't change my voter registration until last Spring so I could vote in the Democratic caucuses.

 

[BamaSteve999]

I'll say again, from a purely economic/capitalist viewpoint, this company should have been allowed to fail.

When "greed" - or as I refer to it, the desire to better my station in life - is paired with good judgment, it is a very good thing. When "greed" is paired with bad judgment, or apparently in some cases with no judgment, it is a very bad thing.

Capitalism is a ruthless economic system when allowed to function in that manner; it's pretty much a survival of the fittest ethic. All these bailouts say to everyone is that as long as your failure might have a negative impact on the economy (translation - it might hurt my chances of getting reelected) then your "greed" paired with bad judgment will not only go unpunished, but it will be rewarded. Obviously, this is a VERY dangerous message.

I will say that I am proud of Senator Richard Shelby from Alabama, who unequivocally stated that AIG should not be bailed out, nor should any of the others. We need to take our medicine and get back to the fundamentals.

 

[Displaced Bama Fan]

DBF, you lost your illusion about the same age I lost mine

Yep, when the GOP ran Bob Bore, I mean Dole, against Bubba, I knew it was over.

 

[CrimsonCT]

This article has a very depressing graphic that illustrates the loss of $4 trillion from the market in less than a year.

Citigroup: $236.7 billion to $97.8 billion.
Bank of America: $236.5 billion to $150.2 billion.
AIG: $179.8 billion to $32.3 billion
Goldman Sachs: $97.7 billion to $61.3 billion
American Express: $74.8 billion to $45 billion.
Morgan Stanley: $73.1 billion to $41.1 billion.
Fannie Mae: $64.8 billion to $700 million.
Merrill Lynch: $63.9 billion to $24.2 billion
Freddie Mac: $41.5 billion to $300 million.
Lehman Brothers: $34.4 billion to $2.5 billion.
Washington Mutual: $31.1 billion to $2.9 billion

 

[TRUTIDE]

Are there any Constitution scholars that would know the constitutionality of using taxpayer money to save a private company? Are they getting by with this by calling it a loan?

I am against this all the way but according to the administration, this is a loan that the country will eventually make money off of. They also say that the economic impact of such a company failing is far reaching to many Americans across the country. Loans, home and auto insurance, 401K etc. It is a hard call. Neither candidate is talking about this move much. I think McCain came out and said it would be best for the country and I have not heard Obama say one way or the other. This is obviously a tough call. As I said, on the surface I am against it and I think the Bush administration initially said there would be no bailout but if the consequences of not doing it are to spiral the country into a depression, then I would flip flop on this issue.

I do like McCain calling for an investigation into this. Responsinle people need to be punished.