As featured on p. 218 of "Bloggers on the Bus," under the name "a MyDD blogger."

Monday, March 02, 2009


Our children and our children's children will be payinf for AIG.

The new deal, the government's fourth for AIG, represents a nearly complete reversal from the one first laid out in mid-September. Back then, federal officials acted as a demanding lender, forcing the insurer to pay a steep interest rate for what was expected to be a short-term loan. Now the government is relaxing loan terms by wiping out interest in hopes of preserving AIG's value over a longer period.

With the latest move, AIG will have the benefit of up to $70 billion from the TARP program; it got a $40 billion TARP investment in November. The total amounts to 10% of the $700 billion financial-sector rescue fund, money that most lawmakers did not expect would go toward propping up a troubled insurer. Officials believed they had little choice but to use the TARP money, particularly because they lack the authority to unwind a troubled firm such as AIG the way the government can do now with failing banks.

Am I the only one annoyed that the AIG board had to approve this crap, as if they had other options or any leverage at all?

The problem, as I understand it, is how invested AIG is in covering bets made by the banking industry. So all those writedowns on mortgage-backed securities and the rest affect their bottom line. That's the only way I can understand a $62 billion dollar quarterly loss, the biggest corporate loss in US history.

I'm speechless.

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