Bailout of American International Group insurance


This Associated Press video is called Government to Provide $85 Billion Loan for AIG.

By Bill Van Auken in the USA:

US Federal Reserve announces $85 billion bailout of insurance giant AIG

17 September 2008

Following emergency consultations between the Federal Reserve, the US Treasury and the Democratic leaders of both houses of Congress, the Federal Reserve on Tuesday night announced a bailout of the Wall Street insurance giant American International Group (AIG).

According to reports posted by the New York Times and the Wall Street Journal, under the emergency plan the Fed will provide the failing firm with an $85 billion loan in exchange for 80 percent of its assets.

The reported bailout is a reversal of the policy adopted by the federal government just last weekend, when it failed to intervene to stop the collapse of Lehman Brothers, the country’s fourth largest investment bank. According to the Journal, government officials believed “it would be ‘catastrophic’ to allow AIG to fail.”

See also here. And here.

5 thoughts on “Bailout of American International Group insurance

  1. Posted by: “Sarbah Arthur” sanskynj@yahoo.com

    Tue Sep 16, 2008 9:11 pm (PDT)

    The Federal Reserve, and thus the US taxpayer, is now the primary stakeholder in AIG after agreeing to give them an 85 billion dollar loan. Isn’t this putting the horse before the cart? This is supposed to sure up the economy? See Fed statement.
    http://www.federalreserve.gov/newsevents/press/other/20080916a.htm

    I get that AIG is a large holder of asset backed securities and also the largest insurance company. I understand that shares of AIG are owned by a large majority of mutual funds so if AIG goes down then so do the retirement funds and investments of millions of Americans.

    My problem is with this backwards approach by the Bush administration. If the underlying problem is that people can’t pay their mortgages, and their mortgages are part of a pool held by these sub-prime securities, and these securities are in turn held by many of the financial institutions, and these financial institutions are laying some people off and not helping others restructure loans then we get the instability we are seeing now.

    Sure thing George gets his people together and finds a way to lend the corporations a hand but not the taxpayers. What he should be doing instead is what Obama said. We should be investing money into the American people (stimulus package) and creating jobs with new industry (infrastructure development, alternative energy development) so that people can pay their mortgages. This problem is no going to go away until we address that primary issue.

    I don’t expect John McSame to have any new ideas. He hasn’t had a real thought of his own since he got slimed in the 1999 Republican primaries. For that matter maybe these things are over his head anyway. Maybe Sarah can help him. She knows how to find hundreds of millions of dollars lying around.

    It’s hard for me to think that this election is polling so close. Don’t those so called rational thinking independents and moderate republicans see that this train is off the rails?

    Like

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