tugmoose Posted September 17, 2008 Share Posted September 17, 2008 We now own Fannie and Freddy and AIG!!! Government bails out AIG with $85 billion loan By JEANNINE AVERSA, IEVA M. AUGSTUMS and STEPHEN BERNARD, AP Business Writers52 minutes ago WASHINGTON - For the second time this month, the U.S. government put taxpayer money on the hook to rescue a private financial company, saying the failure of the huge insurer American International Group Inc. would further disrupt markets and threaten the already fragile economy. The Federal Reserve said Tuesday it would provide up to $85 billion in an emergency, two-year loan to rescue AIG, which teetered on the edge of failure because of stresses caused by the collapse of the subprime mortgage market and the credit crunch that ensued. In return, the government will get a 79.9 percent stake in AIG and the right to remove senior management. 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. Both moves were bound to raise questions about the use of taxpayer money to bail out private firms. The Fed said it determined that a disorderly failure of AIG could hurt the already delicate financial markets and the economy. Although little known off Wall Street, AIG does business with almost every financial institution in the world and insures $88 billion worth of assets including mortgages and corporate loans. Its failure could also "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 reversed the government's stance over 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." said Sen. Charles Schumer, D-N.Y. "Hearing of these plans, you have to stop to catch your breath. But upon reflection, the alternatives are much worse." New York officials said the deal helps stave off a fiscal crisis for the state. "Policy holders will be protected, jobs will be saved," New York Gov. David Paterson said Tuesday night. The Fed's move was part of a concerted push to help calm jittery markets and investors around the world. On Tuesday, the Fed decided to keep its key interest rate steady at 2 percent, but acknowledged stresses in financial markets have grown and hinted it stood ready to lower rates if needed. The central bank also pumped $70 billion into the nation's financial system to help ease credit stresses. In emergency sessions over the weekend, the Fed expanded its loan programs to Wall Street firms, part of an ongoing effort to get credit flowing more freely. The stock market, which Monday had its worst session since the Sept. 11 attacks, recovered Tuesday after the Fed's decision on interest rates. The Dow Jones industrials rose 141 points after losing 500 points on Monday. AIG's shares swung violently, though, 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 Quote Link to post Share on other sites
bjorn_skurj Posted September 17, 2008 Share Posted September 17, 2008 Jesus. Of all the industries to nationalize, we choose Wall Street. Quote Link to post Share on other sites
tugmoose Posted September 17, 2008 Author Share Posted September 17, 2008 Jesus. Of all the industries to nationalize, we choose Wall Street.after the big push to privatize social security. Quote Link to post Share on other sites
cryptique Posted September 17, 2008 Share Posted September 17, 2008 after the big push to privatize social security.Good point. It occurs to me that I haven't heard anything more about this spectacularly bad idea during the current campaign... Quote Link to post Share on other sites
Good Old Neon Posted September 17, 2008 Share Posted September 17, 2008 Ah, the wonders and joys of corporate welfare, do they know no end? Quote Link to post Share on other sites
viatroy Posted September 17, 2008 Share Posted September 17, 2008 Il Duce would be so pleased. Quote Link to post Share on other sites
remphish1 Posted September 17, 2008 Share Posted September 17, 2008 If the government wanted to save billions of dollars they would have outlawed short selling! This is the easiest thing they could have done to prevent this huge bailouts. Shorts artificially drove down prices on these giants where they couldn't raise capital anymore. Anyhoo my questions is $85 billion for this bailout?! Where does this money come from? Isn't this like half the cost of the Iraq war and magically we have the money to bail them out when we are not in the greatest economic shape right now? I understand the impact an AIG failure would have but where do we have all this money? Quote Link to post Share on other sites
viatroy Posted September 17, 2008 Share Posted September 17, 2008 China Quote Link to post Share on other sites
LouieB Posted September 17, 2008 Share Posted September 17, 2008 Where does this money come from? Isn't this like half the cost of the Iraq war and magically we have the money to bail them out when we are not in the greatest economic shape right now? I understand the impact an AIG failure would have but where do we have all this money?The money comes from you and me of course, in the form of taxes. Even though the US borrows money, from places like China, ultimately we owe it back to whomever we borrowed it from, so eventually it will come out of our pocket. LouieB Quote Link to post Share on other sites
cryptique Posted September 17, 2008 Share Posted September 17, 2008 eventually it will come out of our pocket....or the pockets of our childen, or grandchildren. Yet another reason why I'm not having kids. Quote Link to post Share on other sites
viatroy Posted September 17, 2008 Share Posted September 17, 2008 AIG has assets of $1 trillion ... so on paper they should be good for the loan. Of course it begs the question, why can't they save their own ass? Quote Link to post Share on other sites
mfwahl Posted September 17, 2008 Share Posted September 17, 2008 ...or the pockets of our childen, or grandchildren. Yet another reason why I'm not having kids.You can sell them, you know Quote Link to post Share on other sites
Sir Stewart Posted September 17, 2008 Share Posted September 17, 2008 Is a Mogel a bagel made out of Sumner Redstone and Ted Turner? Quote Link to post Share on other sites
cryptique Posted September 17, 2008 Share Posted September 17, 2008 tugmoose, can you correct the spelling to "moguls"? I keep reading the thread title as "We're Financial Mohels!!!" edit: and like Sir Stewie, sometimes I also read the title as some sort of bread product. Quote Link to post Share on other sites
NightOfJoy Posted September 17, 2008 Share Posted September 17, 2008 I wasnt consulted about this decision to embrace socialism. I'm calling a board meeting of all American taxpayers to discuss this.....lets say, early November? Quote Link to post Share on other sites
Party @ the Moontower Posted September 17, 2008 Share Posted September 17, 2008 You can sell them, you know How much is a 3 year worth in this market? Quote Link to post Share on other sites
tugmoose Posted September 17, 2008 Author Share Posted September 17, 2008 tugmoose, can you correct the spelling to "moguls"? I keep reading the thread title as "We're Financial Mohels!!!" edit: and like Sir Stewie, sometimes I also read the title as some sort of bread product.Once you become one, you don't have to spell it! Quote Link to post Share on other sites
austrya Posted September 17, 2008 Share Posted September 17, 2008 I wasnt consulted about this decision to embrace socialism. I'm calling a board meeting of all American taxpayers to discuss this.....lets say, early November? It's only socialism when they're hurting. When they're doing good, it's capitalism, baby! Quote Link to post Share on other sites
cryptique Posted September 17, 2008 Share Posted September 17, 2008 Once you become one, you don't have to spell it!I suppose you're right. When I stop spelling things correctly, just assume I've hit the MegaMillions. Quote Link to post Share on other sites
NightOfJoy Posted September 17, 2008 Share Posted September 17, 2008 Concerning this blatant embrace of corporate socialism, Pelosi said "all the gain is privatized and all the risk is nationalized." She's totally right. How can real conservatives and believers in the free market stomach this move? Un-freakin'-believeable the hypocracy this administration and the "Republicans" are. They dont have an ounce of principle in their warmongering bodies. Is this the worst decade in a century or what? Quote Link to post Share on other sites
cryptique Posted September 17, 2008 Share Posted September 17, 2008 Is this the worst decade in a century or what?The '80s and Ronald Reagan laid the groundwork for this decade. Sadly, Clinton did little (if anything) to reverse things. Quote Link to post Share on other sites
NightOfJoy Posted September 17, 2008 Share Posted September 17, 2008 The '80s and Ronald Reagan laid the groundwork for this decade. Sadly, Clinton did little (if anything) to reverse things. I'd agree with that. The rich and powerful pound the middle class and poor into the dirt yet again. Quote Link to post Share on other sites
Good Old Neon Posted September 17, 2008 Share Posted September 17, 2008 Concerning this blatant embrace of corporate socialism, Pelosi said "all the gain is privatized and all the risk is nationalized." She's totally right. How can real conservatives and believers in the free market stomach this move? Un-freakin'-believeable the hypocracy this administration and the "Republicans" are. They dont have an ounce of principle in their warmongering bodies. Is this the worst decade in a century or what? Yeah, whatev Quote Link to post Share on other sites
tugmoose Posted September 17, 2008 Author Share Posted September 17, 2008 IknowIknowIknow!!! Cut taxes!!! Quote Link to post Share on other sites
Moe_Syzlak Posted September 17, 2008 Share Posted September 17, 2008 Is this what was meant by "ownership society"!?! Quote Link to post Share on other sites
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