AIG To Suck Up Another $30 Billion in TARP Funds
Slate points out this morning: "At first the government seemed intent on making sure AIG paid high interest rates for the taxpayer funds, but now those dreams seem to be over as officials have concluded the insurance company is so intertwined with other parts of the financial sector that its collapse would be much more expensive in the long run." (Which, by the way, is also why we need to save the auto industry.) From the New York Times:
The federal government agreed Sunday night to provide an additional $30 billion in taxpayer money to the American International Group and loosen the terms of its huge loan to the insurer, which is preparing to report a $62 billion loss on Monday, the biggest quarterly loss in history, people involved in the discussions said.
The intervention would be the fourth time that the United States has had to step in to help A.I.G., the giant insurer, avert bankruptcy. The government already owns nearly 80 percent of the insurer’s holding company as a result of the earlier interventions, which included a $60 billion loan, a $40 billion purchase of preferred shares and $50 billion to soak up the company’s toxic assets.
Federal officials, who worked feverishly over the weekend to complete the restructuring, said they thought they had no choice but to prop up A.I.G., because its business and trading activities are so intricately woven through the world’s banking system.
But the deal also presents more financial risks to taxpayers at a time when the public and Congress have been sharply questioning the wisdom of risking federal money to bail out private enterprises.
The government’s commitment to A.I.G. far eclipses its rescue of other financial companies, including Citigroup, which has received $50 billion in rescue financing, and Bank of America, with $45 billion.
Credit rating agencies like Moody’s, Fitch Ratings and Standard & Poor’s had been preparing to sharply downgrade A.I.G.’s credit ratings on Monday because of the record quarterly loss. That would have forced A.I.G. to default on its debt, threatening to set off shock waves throughout the financial system as banks holding A.I.G. derivatives contracts would probably demand cash collateral and other payments from A.I.G. during a time when it has little to spare.
The major credit-rating agencies were briefed on the pending deal between A.I.G. and the government, the people involved in the talks said, and they have committed not to downgrade the company’s debt as a result.
Under the deal, the government will commit $30 billion in cash to A.I.G. from the Troubled Asset Relief Program, should the company need it, according to the people involved in the talks. A.I.G. is not expected to draw down the money immediately, but the government’s commitment was enough to satisfy the rating agencies.
and moaning last week with Maria "The economy is Fine" Bartiromo:
http://www.youtube.com/watch?v=LufSCFX3nwo
JT
they loves them gubmint funds for rich bankers and financiers.
The rest of us...we're just laggards sucking at the government teat.
Healthcare...you don't need no stinking healthcare. If you got sick...it's your own fault!
"Anyone that makes less than $150K in this country, has no business voting Republican."
The governments of the world should just give the banks every last nickel produced. Here ya go guys. Don't call us, we'll call you. Let the bastards fail for crying out loud. This is EXACTLY what the idiots did in the '30s. By the time they are done bailing out these crooked clowns, their hands will be tied too tight to help the poor and midclass, no matter how much lip service they pay it. Here's a thought. Sure, here's your bailout, now draw up the papers saying the taxpayer just purchased your business.
Was reading some Canadian economists online predicting the next shockwave to be the insurance industry as a whole. Where does it end?
please try to keep up.
I talked about the elimination of at least one of the U.S. car manufactureres...5 years ago.
I talked about the insurance industry being the next to collapse...over a year ago.
I talked about the banks collapsing...4 years ago.
"Anyone that makes less than $150K in this country, has no business voting Republican."
yeah and damit they dont even hand out free calenders any more either! bummer!
will ensue soon?
I especially want to hear what his boyfriend traders have to say about "Moral Hazard" right about now...
so we own "nearly 80 percent of the insurer’s holding company", and for this we get what?
as an unwilling participant in the payment of these idiots i demand that the CEO, and all upper mgmt be fired and sued for years of past-pay.
also... does it amuse anyone else that these credit "rating" agencies are still in existence? or, maybe i should ask whether or not it enfuriates anyone else...
Time to PARTY!!!
We're gonna party like it's ...nine..teeen..twentynine!
"Anyone that makes less than $150K in this country, has no business voting Republican."
You don't really have a financial system, do you. It's more like a protection racket.
the only reason why an insurance company would need a cash injection is if their obligations grossly exceed their assets.
Which I thought it was illegal... hmmmmm...
Tell me again, why aren't 3/4ths of WallStreet behind bars?
Because they are Republicans!!!
Hasn't the last 8 years of Bush proven that Republicans are above all laws and the US Constitution?
No matter what the crime, you will never be punished - if you are a Republican!
these bitched had an entire division dedicated to creating derivatives like CDSs and instead of using a forensic accountant to help fix these shits, we take their word and pay them more money for bonuses and parties.
this is bullshit.
all derivative-based debt should be allowed to be a one-time write-off and then the derivative should be outlawed once and for all.
Some stuff you can't make up!
(never mind reality).
Shouldn't they be outlawed even before they are written off?/
Else, these scoundrels could still use the footprint of something that never existed (its write off) to benefit themselves?
It would literally take 5 minutes and the stroke of a firm presidential hand to nullify these false debts.
As it stands right now, we're commiting economic suicide by placebo: "Oh, noes... assets that never existed, stopped existing! Therefore we must go through a depression to make up for that!"
not backed by anything; essentially a fucking wager
they should be outlawed on the basis of fiduciary responsibility.
you're right. Japan left themselves in a ten-year slump.
Some stuff you can't make up!
The solution we need would only affect severely less than 5% of the population at worst.
Yet, we will never move forward to enable such solutions. It seems this country has decided we must protect the "sensitivities" of that 5% of the people, who have no problem putting 95% of the population through a "real" grinder... in order to preserve their "fake" wealth.
It is not fair, when the common American works more than ever for (once adjusted for inflation) less money. And yet, the system still does not work?
Republicans loved saying "the market will adjust itself", so why are we giving more and more money to "risk industries" where, if they fail, they'll be subject to other, richer "risk industry" members to scarf it up, rearrange it, repackage and resell it? We're too busy bailing ourselves out of this Bushmess...can't they use their money better than ask for continuous welfare?
Ben Franklin
No company should ever be allowed to be that important to our economy ever again.
"too big to fail" = must be broken up
Too Big To Fail = Too Big To Exist
NOBODY 2012
in the present stimulus plan - but as a common guy who has physically worked for evey nickle I have - well, my patience is about at the end of the line. I almost feel traitorous saying it - but I think that the bast...s should be cut loose and lets just suffer the consequences.
DOW loses 300 points.
is it just me, or do I sense a trend here?
you'd think at some point the Treasury would want to bailout the "consumer confidence"
The insurance industry is a pyramid scam. So long as more money is coming in than going out they can stay afloat. The second you cross that line the whole thing deflates into hot air. AIG is holding a trillion dollars worth of fluff and make believe assets. I like to call this bail out the spend and pray solution. Well that is not entire acurate. I am sure that the wealthy and well connected will be well compensated for their investments. It will just be the commoners that get took through the cleaners.
In California at least, I am willing to bet there are more laws that force people to pay insurance... than there is legislation forcing insurance companies to pay to their policy holders when disaster strikes.
After what they did to most NOLA residents, most insurance companies should rot in hell.
indeed!
Some stuff you can't make up!
Lobbyist!!!! If you pass a bill where the consumer has to have insurance then my company will compensate you Mr.or Ms Congressman.
!
Some stuff you can't make up!
I suppose, looking back at it all, hiring former FEMA Director Michael Brown as CEO wasn't such a good idea...
No, they didn't. It's a joke. But he probably couldn't have done WORSE than whatever halfwit they had running the place.
... what the government is requiring of these companies who are receiving major funding about naming conventions.
AIG is a major contributor to one of the richest soccer teams in the world (Manchester United) having a big AIG on their jerseys.
What about Citibank having a stadium in their name, how about the Home Depot Center. These are all million of dollars.
If you need funds to pay for essentials, you have a revenue problem
If you need funds to pay for frivolity, you have a spending problem
If they have money for soccer teams and stadiums, they don't need ours.
NOBODY 2012
Speaking of insurance companies, one has top wonder if it is more than a coincidence that Obama has decided to make insurance mandatory in his health care plan [how does Obama plan to make it a requirement for working class and poor families to carry insurance when they can barely scrape enough food on the table for their families?] since those same insurance companies contributed more than a million dollars to Obama's presidential campaign. This quid pro quo arrangement undoubtedly goes a long way in influencing Obama to not even consider the idea of a single payer plan as to do so would not serve to benefit one of the biggest contributors to his attaining the presidency.
about $120,000.00 and it would get me out of debt completely. Good Bye house payment, good bye two car loans, good bye credit card and good bye medical bills. Wonder what would happen to the economy if it were the consumer that was bailed out.
you would not work like a slave for shit pay to make other people even richer. Would you?
Also having a relative financial security would give you less stress, and you will find yourself having all that free time to think about things. Rather than having to work 2 jobs, come home exhausted, and only having time to think how the f*ck you are going to be able to pay all those bills...
These are all things that are very good for the common American citizen, esp. those in the middle class. It is not so good for the bottom line of the people at the top. Next thing you know... you have a bunch of educated people, who are not hungry, and are not afraid about their homes... requesting the rich start paying their far share.
Mon dieu! That would not be prudent!
Why do you pay your debts?
Why do I pay my debts? Because I am suppose to. So my credit score won't be bad. Don't you pay yours?
What do you gain out of it?
I don't have debts. I was just wondering what motivates people to play the credit game? It seems to me that the system is stacked against you. It seems to me to be a system designed to make people pay 3 or 4 times the value of something.
are not enough to cover a lot of their needs right away.
Most people go into debt, not by choice, but almost by obligation.
Some people are correct in portraying debt as a modern form of slavery. Alas, just like the millions of African Americans who were snatched from their homes... most people do not really "chose" to go into debt.
Alas, there are some very interesting thought exercises regarding debt: For example, when you pay back your mortgage... you are basically paying back money which never existed. The bank used your word as an asset. Capital-based systems are the biggest ruse ever played on human kind.
But mostly people use CC's for paying unexpected bills, such as traffic fines, insurance deductibles, generally bailing out of unforseen situations. Things those shit wages we make don't cover.
I also have zero credit balances and have for the last four years, but only because I filed for bankruptcy before Biden sabotaged it. Before that I had almost 30K in CC bills from a bad marriage. Shit happens too.
The people of privilege will always risk their complete destruction rather than surrender any material part of their advantage." J.K. Galbraith
... is, where are all these $Billions? What happened to them? Madoff has about $50B, that other guy, Hannity's buddy, the gold coin dealer, got about $10B, Real Estate agents got a lot by jacking up real estate out of sight. The owners who sold property prior to the collapse got some. Stockprices were driven up making for a lucrative profit for day traders, and dividends paid out was another,
Where is the rest of it?
If you need funds to pay for essentials, you have a revenue problem
If you need funds to pay for frivolity, you have a spending problem
The Bush Administration shipped in in cash by the pallet-load to a couple of 20 year old College Republicans in Iraq!
Obviously, the GOP is the party of fiscal discipline!
I thought they were the party of dismal fiscalism.
Sorry. My bad. Thanks for clearing that up.
"Anyone that makes less than $150K in this country, has no business voting Republican."
Down a destructive path by his picks for his cabinet.. The republicans are laughing their a.. off while Obama's administration continues down this path of destruction...
I believe the corporations are in partners with the republicans to destroy Obama and the democrats with their total abuse and corruption in their policies and thief of our taw money..
Rahm Emanuel is an arrogant a.. which will do things as he d... well pleases because he is a jer....
Emanuel is against the left and you can tell it by his influence on Obama's picks and decisions like giving Dean and other progressive the boot in the a.. out the door.
Emanuel could not make a pimple on either Dean or Kucinich's a...
I do not believe Obama and the democrats would have won the election with out the policies which Dean set in place in the last 5 plus years.. Now they have won control of our government they are showing their a... by their arrogant control and picks for cabinets...
Their secretary of treasury is not any better then Paulson if not worst...
I am glad that moveon.org and other democratic organizations are thinking and selecting their own candidate that listen to the wishes and policies of their voters and that of our laws and constitution...
Our leaders with the influence of the Blue dogs and other republican-democrats are destroying our party and country... looks as if the republican's plot to infiltrate the democrat party with their republican democrats in the past 15 or twenty years is working and this is why the republicans are so d... defiant and arrogant in the words of hate toward policies and decisions the democrat make.
Of course a lot of our democrats have become elitist and arrogant in their decisions they make in total disregard of their voters and country..
The republican party has all the radical right wing corporate republicans and their have been electing their radical center right corporate republicans on the democratic ticket..
None
Why is the government not taking over this company. It does not make sense. We just pumped more money in than the market cap. As tax payers we should already own AIG and C!
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using their market caps, it would have been a better value proposition to right out buy the institutions in Wallstreet which we bailed out.
We get the worst of both worlds: we get stuck with the bill, and we get zero accountability.
With such bad business sense displayed by the federal government in the past year or so, it is no wonder some of us are certain that the bailouts are not going to work.
must be time for another reinsurance boondoggle.
"Anyone that makes less than $150K in this country, has no business voting Republican."
They want to give more money to these crooks? Why? Are they planning another retreat in Puerto Rico, Vegas or Miami? LET THEM SINK. They were irresponsible then and they still will be irresponsible.
NOBODY 2012
{ Deleted, Way too long. And you know it. Break it up. SiteMonitor}
We are witnessing the greatest swindle in the history of the world. Was I wrong about anything?
I put a tremendous amount of work in that report. I don't see anyone else putting this together. Show me someone.
Goodbye.
{ I'm sorry you feel that way Alice X. You know the rules. You've seen me delete and ask people to shorten their posts. I appreciate your input.
All you had to do was break it up in to 2 or 3 parts. Would that be too much to ask? If I have to do it to other posters, I have to do it to all posters. SiteMonitor}
statusquObama, change you can only pretend in
Aren't these the same assholes that we just bailed out?...the same ones that threw a $400,000 party with some of the money, never paid it back, and claimed something to the effect that it was how they do business?
Screw "em! Why would the American Taxpayer want to own a 78% share in a FAILURE? Would YOU? They have the right to succeed, let's give them also the right to fail. Adjustments will happen. Anything else is EXTORTION.
I have gotten to the point I'm tired of even hearing about it, because it raises my blood pressure so.
I don't pretend to understand the machinations to this process, but I do know it's got to stop. Continuing to feed this isn't doing any good.
I'm sure this has been put forward at least once. Though it's a little late in the game, set up a bank called the Bank of USA and tell all these parasites to go fuck themselves for all the obvious reasons. The Bank of USA would be owned by The People and branches could pop up all over the country. Oh, I forgot that would be too much like Socialism and of course would piss off all the powers that be that have been sucking us dry since time began. Yes the same fuckers who have caused so many wars and misery. Another thing is we cannot revolt because these same pricks will label us as terrorists and get our military to snuff us out. Keep sucking.
Prove to taxpayers they require a bailout, because I don't believe it. I think this is nothing more than a grab the cash and run scam. HSBC in England has accidentally already admitted it. They are all still making profits in the billions. Just not as much profit as before.
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