PaulChristenson

US Will Provide $85 Billion Loan to AIG

By JEANNINE AVERSA
,
AP
WASHINGTON (Sept. 16) - In a bid to save financial markets and the economy from further turmoil, the U.S. government agreed Tuesday to provide an $85 billion emergency loan to rescue the huge insurer AIG.

The Federal Reserve said in a statement 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.


"The President supports the agreement announced this evening by the Federal Reserve," said White House spokesman Tony Fratto. "These steps are taken in the interest of promoting stability in financial markets and limiting damage to the broader economy."

Treasury Secretary Henry Paulson said the administration was working closely with the Fed, the Securities and Exchange Commission and other government regulators to "enhance the stability and orderliness of our financial markets and minimize the disruption to our economy."
"I support the steps taken by the Federal Reserve tonight to assist AIG in continuing to meet its obligations, mitigate broader disruptions and at the same time protect taxpayers," Paulson said in a statement.
The Fed said in return for the loan, the government will receive a 79.9 percent equity stake in AIG.(now we, the U.S. taxpayer get to potentially pay for the risks that AIG's adventures have caused...especially if after this loan...they turn around and go insolvent anyways...)
Earlier, Fed chairman Bernanke and Paulson met with Senate Banking Committe Chairman Sen. Christopher Dodd, Senate Majority Leader Harry Reid, and House Republican leader John Boehner to brief them on the government's options.
"At the administration's request, I met this evening with Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke. They expressed the administration's views on the deepening economic turmoil and shared with us their latest proposals regarding AIG," Reid told reporters. "The Treasury and the Fed have promised to provide more details in the near future, which I believe must address the broader, underlying structural issues in the financial markets."
On Tuesday, shares of the insurance company swung violently as rumors of potential deals involving the government or private parties emerged and were dashed. By late Tuesday, its shares had closed down 20 percent - and another 45 percent after hours. Still, no deal emerged.
The problems at AIG stemmed from its insurance of mortgage-backed securities and other risky debt against default. If AIG could not make good on its promise to pay back soured debt, investors feared the consequences would pose a greater threat to the U.S. financial system than this week's collapse of the investment bank Lehman Brothers.
The worries were triggered after Moody's Investor Service and Standard and Poor's lowered AIG's credit ratings, forcing AIG to seek more money for collateral against its insurance contracts. Without that money, AIG would have defaulted on its obligations and the buyers of its insurance - such as banks and other financial companies - would have found themselves without protection against losses on the debt they hold.
"It might not just bring down other financial institutions in the U.S. It could bring down overseas financial institutions," said Timothy Canova, a professor of international economic law at Chapman University School of Law. "If Lehman Brother's failure could help trigger AIG's going down, who knows who AIG's failure could trigger next."
New York-based AIG operates insurance and financial services businesses ranging from property, casualty, auto and life insurance to annuity and investment services. Those traditional insurance operations are considered healthy and the National Association of Insurance Commissioners said "they are solvent and have the capability to pay claims."

I personally would like to thank all U.S. tax payers for bailing out AIG which is a multinational corporation...

I think I see attorneys for Lehman Brother's and possibly Merrill Lynch getting ready to sue the U.S. Government for selective and discriminatory business practices of loan guarantees...


This is an very interesting article...
Fed is Playing an Incredibly Dangerous Game, a Look Back Over the Past 2 years :: The Market Oracle :: Financial Markets Analysis & Forecasting Free Website

Paul in VT

I used to own an ant farm but had to give it up. I couldn't find tractors small enough to fit it.
-- Steven Wright

LoneCowboy

This is really getting out of control. We have turned into the United Socialist States Republic

Why do only financial firms get rescued?
Hell, the Fed doesn't even cover insurance companies but somehow they can do this?
Ridiculous

Privatize the profits, socialize the risks.

Ridiculous.

Brian H
Longmont CO
Pasture Maintenance
NH TN75DA, NH TC45D,
06 Chevy Duramax 2500HD
03 Freightliner Columbia MBE 460

gunmaker

Government has taken on an existence of it's own, and is operating like it is a living breathing entity. 'We the people' had better get on the ball and reform our government if we do not wish to be subjects of it!

JD 2520 w/46bh, 200cx loader, meyers 6ft plow
jd 425 w/54"mmm& 54"plow

vansimplement

What a mess... it's a slippery slope - our economy has problems, so people clamor for gov't help, which causes more problems, so people clamor for gov't help, which causes more problems....
At least I "own" a teeny portion of AIG now.... that's comforting.

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jbrumberg

"Privatize the profits, socialize the risks.

Ridiculous." - LC

Thank you LC and we, the tax paying people, will ultimately get. I really hope that after all the "finger pointing" is over those who profited from this mess will be "higly illuminated" and appropriate measures be taken. Jay

NH TC29DA with 14LA FEL with 60" HD QA bucket, cutting edge & toothbar, weighted R-1's, FOPS, CCM M-160 58" tiller, Tebben MD 60" Rotary Cutter, Woods LR 108 96" Landscape Rake, Woods GB60 60" Box Blade

emerichsales

Crazy! What's are taxes going to look like in a few years to pay for the bail outs?

Underdog

All good points.
I seem to end up asking; How did we get here.
The first thing that pops into my tiny brain is what has changed and when.
Big turning points in America
1 - The Federal Reserve
The Federal Reserve: History of Lies, Thievery, and Deceit
2 - Womans Suffrage 26 August 1920
What Women Have Done to Politics: Creating Nanny Totalitarianism | BlogWonks
3 - communist influences on america Difference Between Communism and Socialism – Socialism and Communism
4 - woman's liberation The Women's Liberation Movement
5 - this newest generation of white collar workers. Not sure how to look for it.
But they have a different Moral and ethical compass.
Here is an early example A Former Fraudster Speaks Out about White Collar Crime

PaulChristenson

Anyone care to guess what kind of bonuses the bigwigs of AIG will pay themselves this year?...

Paul in VT

I used to own an ant farm but had to give it up. I couldn't find tractors small enough to fit it.
-- Steven Wright

Underdog

AIG hit the radar screen in 2006 AIG to Pay $800 Million to Settle Securities Fraud Charges by SEC; Press Release No. 2006-19; February 9, 2006
American International Group CEO Martin Sullivan
Just left with a payout package is worth $68 million
AIG’s Sullivan: New Poster Boy for Excessive Pay | The Corner Office | BNET

More fun from there tower Greenberg, other ex-AIG executives to pay $115 million to settle C.V. Starr suit - Financial Week

jbrumberg

There are better solutions than this and for some of those individuals or . Jay

NH TC29DA with 14LA FEL with 60" HD QA bucket, cutting edge & toothbar, weighted R-1's, FOPS, CCM M-160 58" tiller, Tebben MD 60" Rotary Cutter, Woods LR 108 96" Landscape Rake, Woods GB60 60" Box Blade