Feds to "loan" AIG $85 Billion

[Coconut]

http://www.msnbc.msn.com/id/26746909/

NEW YORK - The Federal Reserve is close to a deal to take an 80 percent stake in American International Group in exchange for an $85 billion loan, according to sources familiar with the negotiations.

AIG's failure could open the ugliest chapter yet of the financial meltdown.

....   ...

[doobie]

Our financial system is broken, and we're duct taping it.  The only way to properly fix it is let it collapse completely and rebuild it from the ground up.  Oh wait, nevermind the government rather legislate a fix.

[Puke]

I was just listening to the news and they are talking about this. Then of course they have clips of Obama stating how it the fault of the "free market" (Which doesn't exist in America.) and there needs to be more regulation. 

[bigmike]

So now because the FED bailed out the investment banks so the investment banks could bail out the investors of asset backed securities certificates (essentially making most mortgages satisfied TWICE without the knowledge of the homeowner), does this mean anyone with life insurance through AIG can stop paying their premiums and thank their fellow taxpayers?

Yes, we're f*cked.

Yes, let it collapse completely.

[McDuck]

I was just listening to the news and they are talking about this. Then of course they have clips of Obama stating how it the fault of the "free market" (Which doesn't exist in America.) and there needs to be more regulation. 

I saw and noticed that too.  It's sickening to say the least. 

From a curiosity standpoint, one has to wonder just how socialist America could get under an Obama administration...

[J’raxis 270145]

From a curiosity standpoint, one has to wonder just how socialist America could get under an Obama administration...

[lastlady]

check this out 

We The People Foundation brings federal lawsuit to stop the AIG bailout

http://www.wethepeoplefoundation.org/PROJECTS/AIG/AIG-Complaint-9-18-08.pdf

http://www.wethepeoplefoundation.org/PROJECTS/AIG/AIG-MemoLawSupptTRO-9-18-08.pdf

http://www.wethepeoplefoundation.org/PROJECTS/AIG/AIG-Decl-Schulz-9-18-08.pdf

[Lloyd Danforth]

Wonder what AIG's liabilities are as a result of the damage done by IKE

[Friday]

I was just listening to the news and they are talking about this. Then of course they have clips of Obama stating how it the fault of the "free market" (Which doesn't exist in America.) and there needs to be more regulation. 

I saw and noticed that too.  It's sickening to say the least. 

From a curiosity standpoint, one has to wonder just how socialist America could get under an Obama administration...

We don't have to wait that long to find out.  Look how many pillars of the U.S. economy have been nationalized in the past week.  The U.S. Treasury department is now asking Congress for "sweeping power" to buy up more.  The house of cards is a-tumblin' down...

[John Edward Mercier]

Wonder what AIG's liabilities are as a result of the damage done by IKE

The causualty insurance division is fine...
They were being naked short sold to the point they couldn't raise capital to meet the government standards, so the government gave them a stock-backed (79.9%) bridge loan for 24 months at 850 basis points over LIBOR.

[John]

.

[Friday]

http://news.yahoo.com/s/ap/bank_change

Last major investment banks change status (does this mean there aren't any more?! )



By MARTIN CRUTSINGER, AP Economics Writer 7 minutes ago

WASHINGTON - The Federal Reserve said Sunday it had granted a request by the country's last two major investment banks — Goldman Sachs and Morgan Stanley — to change their status to bank holding companies.
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The Fed announced that it had approved the request of the two investment banks. The change in status will allow them to create commercial banks that will be able to take deposits, bolstering the resources of both institutions.

The change continued the biggest restructuring on Wall Street since the Great Depression.

Shares of both institutions had come under pressure ever since the bankruptcy filing last week by investment bank Lehman Brothers and the forced sale of investment bank Merrill Lynch to Bank of America.

Investors feared that the last remaining independent investment banks would not be able to survive in their current form. There had been speculation that both institutions would be acquired by commercial banks, whose ability to take deposits would give them a stable source of funding.

The decision by the two giants of finance to get approval from the Fed to change their own status represented another dramatic development in one of the most turbulent periods in Wall Street history.

In the surprise announcement late Sunday (you know it's serious when the Feds are working on a Sunday    ), the central bank said that to provide increase funding support to the two institutions during the transition period, they would be allowed to get short-term loans from the Federal Reserve Bank of New York against various types of collateral.

The Fed said its action would take final effect after a five-day waiting period required under law.

The decision means that the Goldman and Morgan Stanley will be able not only to set up commercial bank subsidiaries to take deposits, giving them a major resource base, but they will also have the same access as other commercial banks to the Fed's emergency loan program.

After the collapse of Bear Stearns and its forced sale to JP Morgan Chase last March, the Fed used powers it had been granted during the Great Depression to extend its emergency loans to investment banks as well as commercial banks. However, that extension was granted on a temporary basis.

But as commercial banks, Goldman Sachs and Morgan Stanley will have permanent access to emergency loans from the Fed, the same privilege that other commercial banks enjoy.

The action by the Fed's board of governors in Washington came on a day when the Bush administration continued to campaign for quick congressional approval of its request for authority to use $700 billion to purchase a mountain of bad mortgage debt held by financial companies. The effort represented the boldest action yet aimed at stabilizing chaotic financial markets.

Democrats in Congress said they would demand provisions in the bailout measure to protect people in danger of losing their homes as well as seeking to cap executive compensation at firms who get to unload their bad mortgages debt onto the government. But the proposal was expected to win quick congressional passage because both parties are concerned about the adverse reaction in financial markets should the measure look like it was being delayed.

[John Edward Mercier]

It means its worse than anyone was letting on.
And Congress intends to make a further mess.

[Porcupine_in_MA]

And Congress intends to make a further mess.

No way. What are you saying? That the government makes things worse instead of better?

[John Edward Mercier]

The natural economic cycle is the natural economic cycle.
The changes Congress are making are politically motivated (vote buying). Making someones home fall in value more slowly, might make the homeowners feel better... but it won't stop the commodity from seeking its base.