Posted on 09/16/2008 4:49:39 PM PDT by BGHater
In an extraordinary turn, the Federal Reserve agreed Tuesday night to take a nearly 80 percent stake in the troubled giant insurance company, the American International Group, in exchange for an $85 billion loan.
The Federal Reserve and Goldman Sachs and JPMorgan Chase had been trying to arrange a $75 billion loan for the company to stave off the financial crisis caused by complex debt securities and credit default swaps. The Federal Reserve stepped in after it became clear Tuesday afternoon that the banking consortium would not be able to complete the deal.
Without the help, AIG was expected to be forced to file for bankruptcy protection.
The need for the loans became necessary after the major credit ratings agencies downgraded AIG late Monday, a move that likely to have forced the company to turn over billions of dollars in collateral to its derivatives trading partners worsening its financial health.
Until this week, it would have been unthinkable for the Federal Reserve to bail out an insurance company, and AIG's request for help from the Fed of just a few days ago was rebuffed.
(Excerpt) Read more at iht.com ...
AIG is too big to fail.
More corporate welfare. We get the bills, the executives walk away with millions upon millions of dollars and no one says a word about their fraud.
‘The Fed’s action was disclosed after Treasury Secretary Henry M. Paulson and Ben S. Bernanke, president of the Federal Reserve, went to Capitol Hill on Tuesday evening to meet with House and Senate leaders. Mr. Paulson called the Senate majority leader, Harry Reid, Democrat of Nevada, about 5 p.m. and asked for a meeting in the Senate leader’s office, which began about 6:30 p.m.
The Federal Reserve and Goldman Sachs and JPMorgan Chase had been trying to arrange a $75 billion loan for A.I.G. to stave off the financial crisis caused by complex debt securities and credit default swaps. The Federal Reserve stepped in after it became clear Tuesday afternoon that the banking consortium would not be able to complete the deal. ‘
http://www.nytimes.com/2008/09/17/business/17insure.html?ref=business
It’ll be interesting to see exactly what it is they bought.
sigh.
Yep. Lehman affects a lot of people and funds, but nowhere near as many as AIG does.
I wonder if anyone in the media will ask just where this $85 billion comes from? Do they realize that the Fed conjures it out of thin air?
I guess giving all those home loans to illegals, and repackaging them for other ‘investors’ to buy, wasn’t such a good idea afterall.
This mess shows we are one more step to more large company’s being NATIONALIZED by the Fed’s.
Just a few months ago some dems were calling for our oil company’s to be NATIONALIZED.
Many democrats need to be sent to jail for a long time, nad some repubs too no doubt.
Who’s next?
“AIG is too big to fail.
Yep. Lehman affects a lot of people and funds, but nowhere near as many as AIG does.”
Nothing is too big to fail! Even if the federal government were to fail, we could defend ourselves with a levy en masse, if necessary, before we build a new one.
Who’s next?
Me! Me! Me! Pick me!
“Politician: Golly we didn’t want a bailout. But the Fed did it. Don’t blame us. “
What do you bet the Feds won’t make AIG stop giving out millions in campaign contributions even though they are broke!
See the recipients here, just posted. Not good!
http://www.freerepublic.com/focus/f-news/2083883/posts
Wall Street Shake-up Connects to Washington Through Contributions, Personal Investments
Of all of the companies facing major transitions, lawmakers owned the most stock in American International Group (AIG), the nation’s largest insurer, which has asked the Federal Reserve for emergency funding as it faces financial hardships. Twenty-seven lawmakers owned stock in AIG last year, worth between $6.4 million and $20 million. Hayes was at the top of the list of congressional investors, owning stock worth between $2.8 million and $11.5 million, while Kerry followed with stock valued around $2 million.
Of all the companies making headlines this week, AIG has been the most nonpartisan in its contributions, splitting evenly the $9.7 million it has contributed over time. Dodd has racked up the most from AIG, with a total of $281,400, while Schumer takes second with $116,400. McCain and Obama collected $103,000 and $82,600 from AIG, respectively.
Yep. Untied Socialists States of Americo coming soon!
80%???? Who has the other 20%? Why not take the whole 100%?
If AIG failed, it would set off a domino effect across the insurance industry and the cost of lost equity to TAXPAYERS would be infinitely larger than $85 billion.
This is starting to look more like nationalization of our financial institutions.
Obviously the all the _____ that Barclays didn’t want......
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