Giant Insurer Stands to Get Billions More

[City Lights]

Source: NYTimes

Giant Insurer Stands to Get Billions More

By ANDREW ROSS SORKIN and MARY WILLIAMS WALSH
Published: November 9, 2008

The Bush administration was overhauling its rescue of the American International Group on Sunday night, according to people involved in the transaction, amid signs that the interest on its initial credit line of more than $100 billion was putting too much strain on the ailing insurance giant.

The Treasury Department and the Federal Reserve were near a deal to invest another $40 billion into the company, these people said, as part of a huge restructuring of A.I.G.’s debt. The government made an $85 billion emergency line of credit available in September to keep it from toppling and added $38 billion in early October when it became clear that the original amount was not enough.

The restructuring of the deal, which may be announced as early as Monday morning, is just one sign of the intense debate in Washington over how and when the government should be bailing out private companies. The money would come from the $700 billion that Congress authorized the Treasury to use to shore up financial companies. Just this weekend, Democratic leaders in Congress called on the Bush administration to use some of that money to rescue Detroit automakers.

When the restructured deal is complete, taxpayers will have invested and lent a total of $150 billion to A.I.G., the most the government has ever directed to a single private enterprise. It is a stark reversal of the government’s assurance that its previous moves had stemmed the bleeding at A.I.G.

Read more: http://www.nytimes.com/2008/11/10/business/economy/10aig.html?partner=rssyahoo&emc=rss

[MannyGoldstein]

1. Ah, Good. More Gifts For The Predator Class.

Fortunately, the Democratic majority in Congress will stop this cold.

[Dover]

7. Stop it cold? The Dems were the main supporters of the bailout

last I looked.

[MannyGoldstein]

10. Ooops - I Forgot The :sarcasm: Icon

The Dems have been awful on this.

[amerikat]

2. Is there no end to the looting?

They will have no place in the new economy.

[Just-plain-Kathy]

3. This could be why AIG got a FED bailout when Lehman Brothers didn’t.

http://www.democraticunderground.com/discuss/duboard.php?az=show_topic&forum=389&topic_id=4021566

[MannyGoldstein]

4. Yep. n/t

[City Lights]

5. Interesting...so much for "too big to fail."

More like too Bush to fail.

[OwnedByFerrets]

6. The last great theft by the B*sh Administration continues.

[dkf]

8. I still don't understand how AIG got so screwed up.

I know their derivatives shop was a mess, but $150 billion? I don't get it.

[struggle4progress]

9. US throws AIG new $US150bn lifeline (WSJ via The Australian)

Matthew Karnitschnig, Liam Pleven and Serena Ng | November 10, 2008
Article from: The Wall Street Journal

... Details of the revised deal could be announced as soon as today (late tonight or early tomorrow AEDT) -- when the company is expected to report third-quarter earnings. Under the terms ironed out, the government would give AIG more money, including $US40 billion from the US Treasury's $US700 billion Troubled Asset Relief Program. It would also receive less interest than on the bulk of the original loan, while freeing AIG from exposure to some of the risky financial instruments that nearly caused it to file for bankruptcy protection.

The $US150 billion in government aid consists of a $US60 billion loan, a $US40 billion preferred-stock investment and $US50 billion in capital largely to purchase distressed assets which are to be placed into two separate financing entities.

The new package is a tacit acknowledgment that the original $US85 billion rescue in September, combined with an additional $US37.8 billion made available to the company last month, together haven't come close to stabilising AIG. The giant insurer employs more than 100,000 people world-wide and touches business and finance at innumerable points throughout the global economy.

Treasury is currently considering whether to expand the $US700 billion rescue program to apply to a range of financial institutions that provide financing to the broad economy. The department is expected to focus more heavily on injecting equity into companies, placing on the back burner its original plan to buy up troubled assets, such as bad loans and mortgage-backed securities ...

http://www.theaustralian.news.com.au/business/story/0,28124,24629356-36418,00.html

[bertman]

11. This is the perfect example of why our "democracy" is no longer functioning despite the

election of Barack Obama.

When you and I get together with our accountants, or tax preparers, or personal financial advisors, we talk in terms of hundreds, or thousands, or maybe even tens of thousands of dollars. And a few of us probably are fortunate enough to talk about hundreds of thousands.

When the financial elites get together to talk about their finances they talk in terms of BILLIONS OR TRILLIONS of dollars.

The people who buy and control our Congress and President are also people who control the world economy. When these men (and they are most definitely men) get together to discuss their financial "needs" and "wants" they view the U.S. Treasury and other national treasuries as their personal petty cash funds.

When they think of the impact of their investments, their thought processes and discussions do not include such mundane concepts as fairness to the taxpayers, or the good of the people. Their sole focus is on how they can keep their money and make more. Hence we have the newest publicly-subsidized seasonal gift-giving payout to the financial giants of the world, and it's just in time for the holidays.

Many of our politicians, including our President-elect, have already gotten their early Christmas prezzies in the form of campaign contributions and future supplemental payments as needed. Of course, they were all good little boys and girls who did their part by allowing the financial masters of the universe to dip into their Financial Failure Reward Christmas gift accounts before Thanksgiving even arrived.

But sorry, it's highly unlikely that Santa will be bringing gifts like that to any of us.

Merry merry ho ho!!

[wroberts189]

12. Why don't we just open Ft Knox and let Wallstreet take it all? eom

[dysfunctional press]

13. wall st. already has more actual gold than ft. knox...

didn't you see die hard 3...?

http://en.wikipedia.org/wiki/United_States_Bullion_Depository

The United States Bullion Depository holds about 4,603 tons (4,176 metric tonnes) of gold bullion (147.399 million ounces<1>). It is second in the United States only to the Federal Reserve Bank of New York's underground vault in Manhattan, which holds about 5,000 metric tons of gold in trust for many foreign nations, central banks and official international organizations.

[wroberts189]

20. I did see that movie ... thx for the info :) I forgot about NY

Sigh ... I have grown a quite a bit cynical.

[htuttle]

14. We could buy every share of their stock 10 times over for that much money

So why do they get to hang onto the company?

[Amerigo Vespucci]

15. Government Adds $40 Billion To Aid For AIG

Source: The Huffington Post

WASHINGTON — In a record bailout of a private company, the government on Monday provided a new $150 billion financial-rescue package to troubled insurance giant American International Group, including $40 billion for partial ownership.

The action, announced by the Federal Reserve and the Treasury Department, was taken as it became increasingly clear that an original financial lifeline thrown to AIG in September would be insufficient to stabilize the teetering company. All told, the moves boost aid to the company to more than $150 billion. Fed officials, however, expressed confidence that the money would be repaid to taxpayers.

The $40 billion infusion comes from the recently enacted $700 billion financial bailout package. The government is buying preferred shares of AIG stock, giving taxpayers an ownership stake in the company. In turn, restrictions will be placed on executive compensation at the firm.

As part of the new arrangement, the Federal Reserve is reducing a $85 billion loan it had made available to AIG to $60 billion. The Fed also is replacing a separate $37.8 billion loan to the insurance company with a $52.5 billion aid package.

Read more: Government Adds $40 Billion To Aid For AIG

[daa]

16. Read more than that:

they want less restrictions!

But that idiot boortz says no aid for Detroit unless they cancel the union contracts. excuse me boortz, what management contracts were canceled at AIG? Did they stop the 4 grand weekend parties yet? Somebody needs to explain to that asshole boortz that he lost becuase his way didn't work? CHANGE WON!

[JDwho]

17. Seriously?

Are there regulations put in place for this new bonus (um, I mean bailout)? So the guys at the top don't use it on massages, spa treatments, and god knows what else. I really would like to see very strict regulations on how AIG uses this money.

[OneBlueSky]

18. I hope Obama was serious when he said that they'd be monitoring . . .

how these bailout funds are used between now and January 20 . . . I have a hunch his transition team won't be happy . . .

[methinks2]

19. Where do I apply

My finances are pretty crappy in this economy, where do I apply for my bailout check? :puke: