feds to bail out AIG

[akhenaten]

reports are they may give them a bridge loan (not a palin joke)

 

[JimFitz]

reports are they may give them a bridge loan (not a palin joke)

They better!

 

[Laugh O. Grams]

I had a meeting with my accountant today and we were discussing how incredible it was that AIG was in financial trouble...I mean, AIG? The insurance and financial colossus? If you told me a year or two ago that this would happen, I would have never believed it possible. It's truly a sad month in American financial history. Here's hoping we can turn it around sooner rather than later...

 

[Uncle Remus]

I had a meeting with my accountant today and we were discussing how incredible it was that AIG was in financial trouble...I mean, AIG? The insurance and financial colossus? If you told me a year or two ago that this would happen, I would have never believed it possible. It's truly a sad month in American financial history. Here's hoping we can turn it around sooner rather than later...

I'm with you on that 'hope,' last thing we need is some politician tellin' the country we're a nation of whiners, kwim?

 

[JimFitz]

I'm with you on that 'hope,' last thing we need is some politician tellin' the country we're a nation of whiners, kwim?

We can be a bit whiny.

 

[Laugh O. Grams]

I'm with you on that 'hope,' last thing we need is some politician tellin' the country we're a nation of whiners, kwim?

Sure do. Did you know that the guy who proclaimed us a nation of whiners is the same bloke who, in 1999, wrote and pushed through the legislation that deregulated the banking industry which allowed greed and fiscal incompetence to put us in this position in the first place...and that Sen. McCain still considers this guy his campaign's go-to guy on all things financial? Like I said...I sure hope we turn this thing around sooner rather than later...

 

[RitaE]

Just what I've always wanted my government to own, an 80% stake in an Insurance company.

 

[Alaska DogCat]

Apparently, it's OK to bail out an insurance company that took a lot of risks in a free and open market, but if a hurricane slams into a region of our country, we can't summon the initiative to rebuild New Orleans.

So, when did the Republicans become socialists? What about all that talk about the market being the arbiter?

This is just more pandering to the rich by the rich. Someday, we will say enough to this senseless expansion of government for the sake of helping the fat cats and vote in a new government.

 

[disney1990]

Apparently, it's OK to bail out an insurance company that took a lot of risks in a free and open market, but if a hurricane slams into a region of our country, we can't summon the initiative to rebuild New Orleans.

So, when did the Republicans become socialists? What about all that talk about the market being the arbiter?

This is just more pandering to the rich by the rich. Someday, we will say enough to this senseless expansion of government for the sake of helping the fat cats and vote in a new government.

It really is a hard call. But AIG employees over 130,000 people. The ramifications of them going under would be felt around the world.

 

[bsnyder]

Sure do. Did you know that the guy who proclaimed us a nation of whiners is the same bloke who, in 1999, wrote and pushed through the legislation that deregulated the banking industry which allowed greed and fiscal incompetence to put us in this position in the first place...and that Sen. McCain still considers this guy his campaign's go-to guy on all things financial? Like I said...I sure hope we turn this thing around sooner rather than later...

The bill that passed the Senate 90-8, and the House 362-57, and that President Clinton signed into law. That bill?

I'd love for you to explain to me, specifically, how that led to the financial problems of AIG?

 

[yeartolate]

It is funny, when lowly folks go under it is all about over indulgence - big screen television and houses too big for their britches - all we hear about is personal responsibility and whining.

But somehow when it is a corporations behaving irresponsibly - different standard. What about corporate responsibility? What about CEOs making obscene salaries and bonuses only to have their corporations go under the following year.


Makes me sick. I agree individuals need to be more responisble. I get that. But at some point corporations need to as well.

 

[bsnyder]

It is funny, when lowly folks go under it is all about over indulgence - big screen television and houses too big for their britches - all we hear about is personal responsibility and whining.

But somehow when it is a corporations behaving irresponsibly - different standard. What about corporate responsibility? What about CEOs making obscene salaries and bonuses only to have their corporations go under the following year.


Makes me sick. I agree individuals need to be more responisble. I get that. But at some point corporations need to as well.

You'll get no argument from me, on this.

 

[yeartolate]

I just wish I knew what the answer was.

We had Enron out here years back that screwed our state, individual citizens, and definitely many of its own employees. We begged for help. And we were left out in the cold.

These behemoth corporations are out of control.

 

[joviroxx]

Makes me sick. I agree individuals need to be more responisble. I get that. But at some point corporations need to as well.

No disagreement here.

 

[Uncle Remus]

The bill that passed the Senate 90-8, and the House 362-57, and that President Clinton signed into law. That bill?

I'd love for you to explain to me, specifically, how that led to the financial problems of AIG?

This should explain some of that to you:

Bush came to office determined to take these trends even further, to deliver Social Security accounts to Wall Street and target minority communities--traditionally out of the Republican Party's reach--for easy homeownership. "Under 50 percent of African Americans and Hispanic Americans own a home," Bush observed in 2002. "That's just too few." He called on Fannie Mae and the private sector "to unlock millions of dollars, to make it available for the purchase of a home"--an important reminder that subprime lenders were taking their cue straight from the top.

Today, the basic promises of the ownership society have been broken. First the dot-com bubble burst; then employees watched their stock-heavy pensions melt away with Enron and WorldCom. Now we have the subprime mortgage crisis, with more than 2 million homeowners facing foreclosure on their homes. Many are raiding their 401(k)s--their piece of the stock market--to pay their mortgage. Wall Street, meanwhile, has fallen out of love with Main Street. To avoid regulatory scrutiny, the new trend is away from publicly traded stocks and toward private equity. In November Nasdaq joined forces with several private banks, including Goldman Sachs, to form Portal Alliance, a private equity stock market open only to investors with assets upward of $100 million. In short order yesterday's ownership society has morphed into today's members-only society.

Link

along with this:

All insurers take money they collect in premiums and invest them in different forms of assets. The idea is to make money on those investments so that the insurer can keep their premiums low and attract more clients.

But AIG made a bigger investment into securities that were backed by subprime mortgages than most other insurers. As defaults and foreclosures of those loans rose, the value of those securities fell, creating big problems for the firm.

In the past nine months, AIG has reported net losses of more than $18 billion, largely due to its exposure to bad mortgages.
Link

 

[RUDisney]

Apparently, it's OK to bail out an insurance company that took a lot of risks in a free and open market, but if a hurricane slams into a region of our country, we can't summon the initiative to rebuild New Orleans.

So, when did the Republicans become socialists? What about all that talk about the market being the arbiter?

This is just more pandering to the rich by the rich. Someday, we will say enough to this senseless expansion of government for the sake of helping the fat cats and vote in a new government.

The market is the arbiter in this situation. The govt is stepping in to help because there is no quick and easy way for AIG to build capital like a bank can do. AIG has interests around the globe, so the problem would reach out far and wide outside of the US. The ramifications of AIG going under are far greater than that of a very large bank.

If only Bernanke had any sense to lower interest rates to actually help the banks that are in trouble so they could build their capital base with less difficulty. Bernanke seems to not have shown up for many classes on Economics when he was in school. Lowering interest rates would have been a way to help the banking sector without bailing anyone out.

 

[Laugh O. Grams]

The bill that passed the Senate 90-8, and the House 362-57, and that President Clinton signed into law. That bill?

I'd love for you to explain to me, specifically, how that led to the financial problems of AIG?

You don't clearly see where a company who insures financial instruments such as high risk derivative securities would suffer in a fast tanking economic market might find itself in financial straights? While Graham's legislation didn't "specifically" put AIG at risk, it was taken down as a semi-innocent bystander with the rest of his tumbling house of cards. No matter how you slice it, the short term gains made by the 1999 deregulation are having extremely negative long term impact on the economy worldwide.

Quite frankly, after what's happened over the last couple weeks, I wouldn't trust the guy to balance my checkbook...

 

[dvcgirl]

It really is a hard call. But AIG employees over 130,000 people. The ramifications of them going under would be felt around the world.

They weren't bailed out for the 130K employees, they were bailed out because every bank, every state and many businesses have exposure to AIG. Our financial system is so interconnected that if AIG went under, well, it could, in *theory* start a chain reaction where everyone panics and the markets could crash. It's so complicated....all this derivatives market crap with default swaps and all of it....that it's tough to wrap your mind around it.

Keep in mind this is theory, and it sets up this new "moral hazard free" world we live in where giant corporations can act be as poorly managed as AIG and completely get away with it. Of course, the shareholders will be wiped out. Easy come....easy go.

 

[dvcgirl]

Sure do. Did you know that the guy who proclaimed us a nation of whiners is the same bloke who, in 1999, wrote and pushed through the legislation that deregulated the banking industry which allowed greed and fiscal incompetence to put us in this position in the first place...and that Sen. McCain still considers this guy his campaign's go-to guy on all things financial? Like I said...I sure hope we turn this thing around sooner rather than later...

You are exactly correct on this.....Gramm is a scary dude.....and McCain's "go to" guy on the economy. Word is that he'd be up for the Treasury post if McCain wins. If that happens......well, I don't want to think about it.

 

[dvcgirl]

The market is the arbiter in this situation. The govt is stepping in to help because there is no quick and easy way for AIG to build capital like a bank can do. AIG has interests around the globe, so the problem would reach out far and wide outside of the US. The ramifications of AIG going under are far greater than that of a very large bank.

If only Bernanke had any sense to lower interest rates to actually help the banks that are in trouble so they could build their capital base with less difficulty. Bernanke seems to not have shown up for many classes on Economics when he was in school. Lowering interest rates would have been a way to help the banking sector without bailing anyone out.

Ah yes, but Mr Greenspan kept our interest rates at negative real interest rate levels for what....17 months. For banks, money was essentially free. Nice gig if you can get it. And then he kept rates too low for too. All of that liquidity created our housing bubble. That along with some serious deregulation and some major financial engineering on Wall Street.....and here we are.