government bails out aig

[jps]

I know it got mentioned as possibly happening in the financial thread, but thought it deserved it's own.

I'm torn on this ... but leaning more toward the fact that we need to draw a line somewhere. the government can't simply bail out all of these companies over and over.

WASHINGTON (AP) -- In a bid to save financial markets and economy from further turmoil, the U.S. government agreed Tuesday to provide an $85 billion emergency loan to rescue the huge insurer AIG. The Federal Reserve said in a statement it determined that a disorderly failure of AIG could hurt the already delicate financial markets and the economy.

It also could "lead to substantially higher borrowing costs, reduced household wealth and materially weaker economic performance," the Fed said.

"The President supports the agreement announced this evening by the Federal Reserve," said White House spokesman Tony Fratto. "These steps are taken in the interest of promoting stability in financial markets and limiting damage to the broader economy."

Treasury Secretary Henry Paulson said the administration was working closely with the Fed, the Securities and Exchange Commission and other government regulators to "enhance the stability and orderliness of our financial markets and minimize the disruption to our economy."

"I support the steps taken by the Federal Reserve tonight to assist AIG in continuing to meet its obligations, mitigate broader disruptions and at the same time protect taxpayers," Paulson said in a statement.

The Fed said in return for the loan, the government will receive a 79.9 percent equity stake in AIG.

 

[Football_Bat]

A bit like sticking a finger in the Industrial Canal levee, I'm afraid.

 

[KP]

If AIG gets $85 billion, can I get 500k?

 

[Starman]

Welfare for lazy unemployed negros: BAD

Welfare for billion-dollar corporations: GOOD [/reagan_cheney_bush_mccain]

 

[DanOregon]

Brings new meaning to welfare queens driving Cadillacs. And still the Wall Street defenders are arguing against increased regulation and oversight.

 

[Inky_Wretch]

If the USA owns 80 percent of AIG, does that mean we can slap an American flag on the front of Manchester United's jersey?

 

[slappy4428]

If the USA owns 80 percent of AIG, does that mean we can slap an American flag on the front of Manchester United's jersey?

You'd like to think so...

 

[Hammer Pants]

If the USA owns 80 percent of AIG, does that mean we can slap an American flag on the front of Manchester United's jersey?

And call them a soccer club.

 

[Boom_70]

I'm calling for a T- time at the AIG golf course where they only let 10 foursomes out a day.

 

[crimsonace]

Given I have my 403b (the public-employee version of a 401k) with AIG, I've been a bit worried.

But every time the government bails out a failing private-sector business, the country loses. Capitalism is based on risk. The market has changed, and companies like Lehman Brothers, Bear Stearns, Fannie Mae & AIG haven't changed with it (well, that, and the government trying to push "affordable housing" led to subprime loans which led to the current mess).

 

[goalmouth]

Another brilliant move by the party for smaller government.

 

[buckweaver]

Another brilliant move by the party for smaller government.

Your Republican Party at work, folks.

Stop. The. Bailouts.

 

[whatwoulddamondo?]

starman hit the nail on the head. bailouts for rich guys who will invite you into their golf club = good. personal welfare = bad.

 

[crimsonace]

ALL government bailouts -- whether they be corporate welfare or personal welfare -- are on the surface harmful.

By eliminating risk, they eliminate responsibility.

When you eliminate responsibility, people aren't held accountable for their actions. The welfare state (personal) has created an underbelly of families without fathers, which has created a sociological problem that is possibly the United States' No. 1 problem. The welfare state (corporate) has created a nation of companies that can make profits (which are good) when things are good, but then need a safety net when things go bad. Yes, if the company goes belly-up, thousands will lose their jobs and thousands more (like me) could get screwed on our managed assets (thankfully, I don't have that much $$ invested through AIG), but we knew the risk and assumed it.

I've said for a long time that Bush is not a conservative, especially fiscally. His low approval ratings aren't just angry Dems upset about the war. They're also angry Republicans upset about the runaway spending and the Fed's loose-money policy (it's those people that pushed John McCain -- a moderate, but a deficit hawk -- to the forefront of the party, despite the wishes of most in the party).

Rush Limbaugh is mad as a hornet about this ... or at least he was in the 90-second update the local radio station plays on my way to work.

 

[Joe Mac]

Given I have my 403b (the public-employee version of a 401k) with AIG, I've been a bit worried.

But every time the government bails out a failing private-sector business, the country loses. Capitalism is based on risk. The market has changed, and companies like Lehman Brothers, Bear Stearns, Fannie Mae & AIG haven't changed with it (well, that, and the government trying to push "affordable housing" led to subprime loans which led to the current mess).

I wouldn't worry if I were you. I don't think AIG clears its own accounts. Check on your statement. If there is a clearing house at the bottom, like Pershing, then your money is heald elsewhere. [Pershing is owned by the Bank of NY].

If they do clear, the assets are insured by the SIPC for at least 500,000 and usually more, since most firms have a private insurance policy.

That said, your assets - if they are held in stocks - are safe.

If they are held in Mutual Funds, then they are at the fund company. AIG just is the middleman.

I was a broker for 12 years before going into this business, so I hope that helps.

 

[zagoshe]

ALL government bailouts -- whether they be corporate welfare or personal welfare -- are on the surface harmful.

By eliminating risk, they eliminate responsibility.

When you eliminate responsibility, people aren't held accountable for their actions. The welfare state (personal) has created an underbelly of families without fathers, which has created a sociological problem that is possibly the United States' No. 1 problem. The welfare state (corporate) has created a nation of companies that can make profits (which are good) when things are good, but then need a safety net when things go bad. Yes, if the company goes belly-up, thousands will lose their jobs and thousands more (like me) could get screwed on our managed assets (thankfully, I don't have that much $$ invested through AIG), but we knew the risk and assumed it.

I've said for a long time that Bush is not a conservative, especially fiscally. His low approval ratings aren't just angry Dems upset about the war. They're also angry Republicans upset about the runaway spending and the Fed's loose-money policy (it's those people that pushed John McCain -- a moderate, but a deficit hawk -- to the forefront of the party, despite the wishes of most in the party).

Rush Limbaugh is mad as a hornet about this ... or at least he was in the 90-second update the local radio station plays on my way to work.

Amen. Amen. Amen. Amen and Amen.

This kind of welfare, to me, is far more harmful, far more immoral and far more disgusting than any personal welfare program liberals can dream up (and we all know they are good at dreaming them up).

This is just the latest in a series of holes blown in the fallacy otherwise known as "Republicans are fiscally conservative and/or for smaller government"

 

[SlickWillie71]

I'm sure the GOP talking point for tomorrow will continue to lay blame on the "two years of a Democratic Congress."

They sure as hell deserve their piece in the pie of blame, but let's not pretend the GOP Congress of 2001-06 was a bunch of do-gooders who tried to keep this flood from happening. I'm sure when the *** finally breaks on this, they'll be fine while the rest of us will be drowning. Heard someone say that no one should be shocked if the Dow takes a 1,000-point header tomorrow. If that's the case, God help us all.

 

[slappy4428]

Lets see what happens when one of the Big Three (Re: Ford) comes asking for a loan, hat in hand...

 

[Freelance Hack]

I agree with many of you about corporate welfare, but let's keep in mind that we could spend $50 billion now and save some jobs, or we could let AIG go to hell and let thousands of people go to the unemployment line.

Not all of these companies employees are rich fat cats. They are clerks, secretaries and other lower five-figure wage earners. There are small businesses that rely on corporations for a good chunk of their revenue. We can't just shrug our shoulders and say sorry. That would be catastrophic.

Yes, businesses have proven we need regulation. Not only that, but we need to back up those regulations with significant punishments for those who can't abide by them. The inmates can't run the asylum, but we can't punish the innocent with the guilty.

 

[Joe Mac]

I agree with many of you about corporate welfare, but let's keep in mind that we could spend $50 billion now and save some jobs, or we could let AIG go to hell and let thousands of people go to the unemployment line.

Not all of these companies employees are rich fat cats. They are clerks, secretaries and other lower five-figure wage earners. There are small businesses that rely on corporations for a good chunk of their revenue. We can't just shrug our shoulders and say sorry. That would be catastrophic.

Yes, businesses have proven we need regulation. Not only that, but we need to back up those regulations with significant punishments for those who can't abide by them. The inmates can't run the asylum, but we can punish the innocent with the guilty.

Let's not forget the insurance policies, which will then go into the hands of the states they are underwritten. For example the state of NY will have to pay out the claims on NY AIG policies according to state law.