Fed Takes Steps to Aid A.I.G.

[tpsbmam]

Source: NY Times

Federal Reserve officials were in urgent talks with Goldman Sachs and JPMorgan Chase on Monday to put together a $75 billion lending facility to stave off a crisis at the American International Group, the latest financial services company to be pummeled by the turmoil in the housing and credit markets.

The talks, which began last week and continued through the weekend, added to the sense of agitation in the stock market Monday, as investors grappled with the implications of the bankruptcy of Lehman Brothers, which, like A.I.G., was a large counterparty to derivatives contracts held by countless financial institutions.

Shares in A.I.G. tumbled more than 60 percent on Monday morning as concerns grew that the firm lacked capital to withstand cuts to its debt rating, which appeared imminent. The company’s potential write-offs are mounting and may ultimately reach $60 billion to $70 billion, according to two people briefed on the situation.

The day started off with news that A.I.G. had requested a $40 billion bridge loan from the Fed, a request that was rebuffed, and ended with the word that its need had soared to $75 billion. The firm suffered several ancillary credit-rating downgrades during the day, but as of Monday night had not seen its main debt ratings cut by Standard & Poor’s or Moody’s.

Read more: http://www.nytimes.com/2008/09/16/business/16aig.html?hp

[GreenPartyVoter]

1. We'd have a little more money for this corporate welfare if we'd just, oh.. I dunno..

canceled the war, maybe??

[Pale Blue Dot]

2. Things are moving really fast. This is old news.

From the article:

The firm suffered several ancillary credit-rating downgrades during the day, but as of Monday night its main debt ratings had not been cut by Standard & Poor’s or Moody’s.

Now we know that S&P HAS downgraded AIG's main debt rating.

[lurky]

5. Moody's has too.

http://money.cnn.com/2008/09/15/news/companies/AIG/?postversion=2008091521

[DJ13]

3. CNBC has said AIG is filing bankruptcy tomorrow

That Fed plan was news this afternoon, before they were downgraded by both Fitch and S&P.

[jwirr]

10. So all those insurance policies that people in Galveston/Houston

held are no good anymore??

[1monster]

11. Does that mean that the equity I have in my American General retirement/life insurance plan is gone?

I'm struggling right now with both mine and my husband's work hours and pay cut drastically. I'm hoping to hold on to my house.

The money in my insurance policy was my last liquid asset.... :grr: :scared:

[Wapsie B]

4. Now if we bail them out we'll get stock in those companies right?

Don't the taxpayers get anything for propping up these money-grubbing repugs? I'm only half-facetious here. Seems to me the taxpayers should get a piece of the ownership here. If not, no sale.

[lurky]

7. Is AIG even bail-outable?

These guys have their hands in trillions of dollars of crazy-complicated mysterious transactions. How would we even do that?

[closeupready]

8. Well, government regulation is essentially public ownership, isn't it?

Ownership is about calling the shots, and regulation restricts these entities' legal range of maneuvers. In other words, if they get bailed out, they MUST accept more government regulation. Period.

[amandabeech]

12. Sort of.

In the Freddie and Fannie bailouts, the U.S. gov could end up owning 80% of the common and all of a series of senior preferred.

AIG is regulated by the State of New York. It is unclear whether NY would come up with the kind of bailout package involving equity that the Feds have for the mortgage GSEs.

The Feds put Freddie and Fannie into conservatorships. It is unclear whether NYS would do any of this.


Regulation alone doesn't give ownership. Companies are owned by their stockholders, even when the gov owns the stock.

[Politicalboi]

6. This is all Bullshit

Again they are stealing our money and making it look like a bail out.

[bluesmail]

9. Carlyle Group is poppys Private Equity 'bank'

Carlyle, Like Exxon Mobile wants to be THE head of the herd, granting 'favors' to the little remaining banks. Head Hurts.

[grasswire]

13. where is Carlyle in all of this?

I hope someone's tracking Poppy's tricks.

[defendandprotect]

14. Since when is the FED running the country ...? Where in Hell is Congress...???

ON VACATION ---!!!

[upi402]

15. With the yellow stripe

in the middle of the road. Watching the traffic go by.

[merwin]

16. Didn't the govt just say today that they weren't going to be bailing out any more companies?

WTF?

[dipsydoodle]

17. BBC News : Crisis threatens insurance giant

http://news.bbc.co.uk/1/hi/business/7618430.stm

Aside from that analysts are saying that the root cause of this financial debacle is infact cheap money was was used stupidly in an almst complete absense of regulation. In other words neither the USA not the EU should have kept interest rates low for so long.