Government Bails Out AIG

[jeffrey]

Acting to avert a possible financial crisis worldwide, the Federal Reserve reversed course on Tuesday and agreed to an $85 billion bailout that would give the government an ownership stake in troubled insurance giant American International Group.

All of A.I.G.’s assets would be pledged to secure the loan, these people said, and in return, the Fed would receive warrants that could be exchanged for an ownership stake. Stock of existing shareholders would be diluted, but not wiped out.

A person briefed on the matter said the agreement does not require shareholder approval...

http://www.nytimes.com/2008/09/17/bu...hp&oref=slogin

[sweeps]

*pulls out wallet* Ok, how much is this going to cost me?

[kork13]

.....jaw... on... the floor.....

This is interesting. For the last few days the Fed, Treasury Secretary, and hinted by the President that bailouts were not going to be considered. Admittedly, this afternoon's news of Bush's meeting with those individuals and others hinted at something in the works, but this is pretty significant in any case.

media's gonna have a field day tomorrow, especially since this was announced so late in the day. I'm curious how wall street will react. while i personally believe that day to day movements (swings) of wall street are only slight in significance, they're interesting to watch, just to see what the "money mafia" is thinking...

Originally Posted by sweeps

*pulls out wallet* Ok, how much is this going to cost me?

totally agree.... what will be of interest is what will happen 3, 5, 7, 10 years from now, when these actions are largely forgotten. While forgotten, the impact of these bailouts, sellouts, collapses, etc. are conna re-form the state of our nation's money matters for a looooooong time to come. I think over that time frame, we're going to find a substantially different marketplace.

[Joan.of.the.Arch]

OMG! Well you broke the news to me, Jeffrey. I had been seeking out any news on AIG day long, but finally gave myself a break around 6-6:30 (central), which would have been just as Bernanke and Paulson came out of their meeting to explain the deal to Congress. Oh, my achin' head. I didn't expect it, at all.

[Broken Arrow]

Yeah, it was making all the news yesterday....

Would it be arrogant of me to say that I wasn't surprised at all? I actually kind of expected that. Paulson said no to Lehman, but he didn't say no to any further bailouts. AIG had a huge hole in the balance sheet; one that no one in the remaining financials can easily fill. And yet, AIG is an wide-spread insurance group. So... what other choice is there other than a government bailout? Lehman was already quite a rattle, but I think the threat to the confidence and stability of our financial institution was simply too great with AIG....

Though I'm not seeing any more potential candidates at this time, future bailouts may still be possible. However, I think Uncle Sam is going to push for mergers and acquisitions from this point on. How much backing they're willing to provide to make that happen, well, we'll just have to see....

[pfblueprint]

I think this is a different situation, AIG just needed time to sell off some of the more profitable divisions whereas other firms were simply dead in the water. Lehman was like a Bear Stearns 2, AIG is a slightly different scenario.

[Broken Arrow]

Agreed.

[pfblueprint]

Though it's still an ugly scenario.

[tripods68]

I was really suprised about AIG. I never realized that they were in trouble until CNBC started mentioning them this week. But I wasn't all suprised about Lehman since the Bear Stearn debucke that took placed last March.

[sweeps]

Originally Posted by tripods68

I never realized that they were in trouble until they CNBC started mentioning them this week.

Or were they in trouble because CNBC started mentioning them this week?

[sweeps]

By the way, where are the people with torches and pitchforks yelling "Socialism!"?

Could you imagine if all this happened under a Democrat's administration? People would be going ape****.

[tripods68]

Originally Posted by sweeps

Or were they in trouble because CNBC started mentioning them this week?

I meant mentioning in Bankruptcy mode or bail out situation.