Government to bail out AIG to the tune of $85 billion
Remember this lesson folks: when average Joes and Janes lose their jobs and homes due to this economic meltdown it’s a correction; when a corporation of the size of AIG runs itself into the ground is deemed “too big to fail” and it gets to suck on the government teat. They break it, you own it.
Another day, another bailout. The U.S. government stepped in Tuesday to rescue American International Group Inc., one of the world’s largest insurers, with an $85 billion injection of taxpayer money.
It was the second time this month the feds put taxpayer money on the hook to rescue a private financial company, saying its failure would further disrupt markets and threaten the already fragile economy.
…The problems at AIG stemmed from its insurance of mortgage-backed securities and other risky debt against default. If AIG couldn’t 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.
That’s the bottom line, Lehman was tossed overboard because it wasn’t “big enough” a threat to the economy and thus it was allowed to fail. How about them apples? And the sad truth is that it would be a real domino effect if AIG was allowed to fail.
“The administration is approaching an unprecedented step, but unfortunately we are living in unprecedented times. Hearing of these plans, you have to stop to catch your breath. But upon reflection, the alternatives are much worse,” said Sen. Charles Schumer, D-N.Y.
…”We expect that the proceeds of these sales will be sufficient to repay the loan in full and enable AIG’s businesses to continue as substantial participants in their respective markets,” the statement said. “In return for providing this essential support, American taxpayers will receive a substantial majority ownership interest in AIG.”
What do you think the direct return on investment is going to be for the American people? And how many other “too big to fail” companies have whimpering executives already sitting at the table with the government begging for their turn on the teat?
Did you know that the former CEO of AIG received a $47 million severance package for running the ship aground — should we start calling these executive windfalls “Carlys” or “Fiorinas” now? And John McCain wants less regulation, not more oversight of these runaway trains. That whole free market, let-the-markets-decide philosophy works — until it doesn’t. Then it becomes socialism – has conservatism completely failed or what? That’s truly black humor, because there’s nothing funny about this situation — Bush, McCain and the rest of the GOP who led to this place want to continue with more of the same.
All I can say at this point is think of the bullet we dodged under Bush/McCain by the failure of Dear Leader’s proposal to invest part of Social Security in the market.
Oh, while we’re on the topic of Carly Fiorina, her comments that both McCain and Palin lack the skills to run a major corporation, the McCain campaign is tossing her under the bus. (CNN):
“This campaign source said Fiorina would be discouraged from additional media interviews.
Another top campaign adviser was far less diplomatic.
“Carly will now disappear,” this source said. “Senator McCain was furious.” Asked to define “disappear,” this source said, adding that she would be off TV for a while – but remain at the Republican National Committee and keep her role as head of the party’s joint fundraising committee with the McCain campaign.
Fiorina was booked for several TV interviews over the next few days, including one on CNN. Those interviews have been canceled.