Posted on 09/17/2008 4:26:15 AM PDT by rightwingintelligentsia
(CNN) -- The Federal Reserve Board announced an $85 billion plan Tuesday to bail out troubled insurance giant American International Group Inc.
The federal government decided to intervene after determining a failure of the company, whose financial dealings stretch around the world, could hurt the already delicate markets and the economy.
Personal finance expert Suze Orman appeared on "Larry King Live" on Tuesday to discuss what the AIG bailout means to you and how safe is your money during this economic downturn. The following is an edited version of the interview:
Larry King: A few months ago, you said on this very show that you would be worried if there was another big government bailout. It's now happening. Should the government be helping AIG?
Suze Orman: Well, in this particular case, I have to tell you they should. Bear Stearns, very different. Lehman, very different. AIG is an international giant that just doesn't have ramifications here in the United States. It is worldwide. They're like in 130 countries. They have 100,000 employees. Everybody has an AIG insurance policy. So in this particular case, my opinion, thank God, they bailed out AIG.
(Excerpt) Read more at cnn.com ...
BUT...I am sure that was intended to benefit the responsible, hard working (low middle income) individuals. You shouldn’t give out big loans to people without a track record.
They couldn’t have been mandated to write BAD loans. They just didn’t do their research. Must have been some form of monetary gain per loan for whomever approved these risky NINJAs.
The bills comprising the act were introduced in the Senate by Phil Gramm (R-TX) and in the House of Representatives by James Leach (R-IA). The bills were passed by a 54-44 vote along party lines with Republican support in the Senate and by a 343-86 vote with bipartisan support in the House of Representatives. Nov 4, 1999: After passing both the Senate and House the bill was moved to a conference committee to work out the differences between the Senate and House versions. The final bill resolving the differences was passed in the Senate 90-8-1 and in the House: 362-57-15. It was signed into law by President Bill Clintonon November 12, 1999.
Maybe it depends on what you call "hispanic." In the 90's, Jackson Heights, NYC was the cocaine capitol of the universe. Aside from a small concentration of Indian stores on one end and a community of Puerto Ricans on the other, JH was all Columbian and Bolivian...as well as the abutting areas of Elmhurst, Woodside and Corona. In those days, you couldn't swing a dead cat without hitting a NINJA, no-doc or liar-loan storefront "mortgage broker" on any commercial street there. They had to be getting business, or they would have folded. Aside from the OLD residents of the community from the 60's or before, people who would have no need of a mortgage, the neighborhood was "hispanic." Who do you think these storefronts were doing business with? It was a way to launder drug money while passing the risk up the financial food chain.
I still don't see that as a bad thing.
Well, either way were screwed because the damage was already done when all these people took out loans they couldnt pay.
Considering that, before all the salaries and other essential expenses, the cost of gubmint bureaucracy, by GAO numbers, is at least 30%, it makes no sense whatsoever for the gubmint to be involved. At least 30% of every every dollar taken in by the Federal gubmint is wasted or stolen. Why does it make more sense for the gubmint (i.e. the taxpayers) to take on this debt at at least a 30% premium over what the free market could do if left to it's own merits?
The conditions for this entire situation, the mortgage meltdown, the energy "crisis", all of it, were created by the policies of the Federal gubmint. To quote Ronaldus Magnus: "Gubmint is not the answer, it's the problem."
I guess the next big question is going to be whether or not AIG can now make good on this loan.
FWIW, I agree with Mr. Tesla in post #52. I am not a shareholder in AIG. I didn't share in their profits and therefore I should not be forced to share in their losses...
ok...good point and well taken.
And this is basically the starting point isn’t it?
It would have interesting if someone - during Bush’s administration had attempted to reel this in.
There was an attempt made to reform fannie and freddie - but it didn’t go through.
They would have accused the “idiot” Bush of meddling where he didn’t belong.
“FWIW, I agree with Mr. Tesla in post #52. I am not a shareholder in AIG. I didn’t share in their profits and therefore I should not be forced to share in their losses... “
we would have shared in the losses regardless.
You seem to think it is hype that the threat of collapse was real - but I think this was a last resort measure to ward off collapse.
Either way we were screwed.
We were screwed way back when all these mortgages were first approved.
It’s just a matter of how do want to get hit?
I prefer not to see the banks shut down.
I prefer not to see panic and chaos.
Deficit and debt aren’t much fun either, but in the past we have managed to grow our way out of those messes.
I don't blame him directly... but I do lay much of the blame at the feet of the Democrats. President Bush and John McCain have made a number of attempts since 1993 to reform Freddie and Fannie and been rebuffed by the Dems.
I fault President Bush for not taking a harder stance and going around the media to the American people... but the reality is people really weren't that interested until now anyway.
“I fault President Bush for not taking a harder stance and going around the media to the American people... but the reality is people really weren’t that interested until now anyway.”
True.
Bush has not been a very aggressive president.
And even if he had been? How far would he have gotten?
Hard to say.
All I was doing was giving you the difference in terminology, since yours was not correct.
I don’t need a lecture, because I do not support bail outs.
I understand exactly what is going on in government, and have no more respect for it than you do. So don’t try to pull a “Charlie Gibson” and be condescending.
Brought to him by Republican Phil Gramm and Republican Jim Leach.
The insurance arm of the company is adequately funded. It is the financial services arm that is the problem. If it fails, interest rates go up worldwide in the short term but then level off as smaller companies replace AIG’s place in the market. The problem is the politicians are willing to risk more such failures in the long term by providing an incentive for mismanagement of companies that are “too big to fail” so that they can stabalize things in the short term. Capitalism be damned. We wouldn’t want to jeopardize reelection!
No, the bill I think you’re referring to is the Gramm-Leach-Bliley Act. And remember, Phil Gramm has been an economic advisor to John McCain.
It was.
Orman gives out so much BAD advice it is hard to take anything she offers seriously.
Or on their swords. That said, I can see a loan - 0% for the first 12 months, then jumping to 16%... Me? I'm tired of bailing out multimillionaires.
Orman gives out so much BAD advice it is hard to take anything she offers seriously.
Sorry, didn’t mean to sound snotty, just urgent.
If you didn’t see it yet, the Treasury is holding a special auction to recapitalize the Fed. Yep, the Fed has blown thru 800 billion dollars and is now going to get tax dollars to blow more on bailing out the Friends of Wall Street.
AIG cannot make good on the loan; their subsidiaries are not worth 85 billion plus the Guido interest rate the Fed is supposedly charging, and their CDS department will be losing a lot more money since delinquent loans are still increasing and most likely still will well into 2010.
That was 85 bil of taxpayer dollars thrown into a rathole and it’s not coming back.
Frankly, it’s time to get on the phone several times a day or visit your friendly CONgressfolk and tell them to stop taking taxpayer money to bail out these comapnies. If they don’t stop now, it’s off to the same fate as Weimar Germany and we know how that turned out.
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