AIG's not getting split up, sold off and closed down (yet anyway), Geithner's just talking about speeding up the current restructuring. http://www.bloomberg.com/apps/news?pid=20601127&sid=a6Z8vz0mx0fs
From MSN website: AIG, which received billions in US bailout funds, is also to pay back the government for the hefty bonuses shelled out to top executives, Geithner said. Also = Bail-out + bonuses
The U.S. Government owns 80% of AIG. They (we) are also making 3-month LIBOR + 8.5% on the money that was loaned to AIG. In September of last year, Fed Chairman Ben Bernanke used a rarely used statue in banking laws from 1932 to loan money to AIG. This had nothing to do with Congress. Zero.
True. Thats what some free market extremists dont understand, even if the bailout folks are wrong in 95% of bailouts, the consequences of the 5% that they are right are so montruous that you gotta support their efforts. Jim Rogers claims banks/Ibanks have been failling for decades and its not a big deal, he is yet to name a single instution bigger than LEH in terms of CDS exposure, liabilites that has failed without causing big disruptions(he can adjust to GDP to take into account inflation). AIG could set off a cascade of them, risk taking would vanish
True. And if anyone doesn't have that great of an understanding about the global CDS exposure out there, just take a look at what happened to the markets when LEH went under. Derivatives do not operate in a VACUUM. It's about COUNTER-PARTY RISK!!! I'm amazed a lot of posters here on ET that do not appear to understand this. They sound an awful lot like a bunch of our Congressman, no matter what side of the aisle they are from.
Its time to declare the CDS's illegal & therefore null and void and net them out. That would be a first step in solving the 'too big to fail' problem. Keeps contract law intact, too. Its one thing to grumble about our legal system, but once we start willy-nilly disregarding it, we might as well toss in the towel for the next hundred years. In their eagerness to assume power, the current administration is playing around like a child in a sandbox, knocking over sand castles as it steps back to admire its own work. Oops. Their disregard for lexisting law is potentially endangering our constitution. Can't have your cake and eat it too, I'm afraid.