>If AIG was such a gosh-darned bargain, why didn’t some
>other private entity make a deal for it? Why did Uncle
>Sap have to pick up that garbage company?
Because AIG, like Lehman, were very arrogant in thinking they could dictate terms - ie they thought they still had chips on the table. When Uncle Sam let Lehman die, both Merrill and AIG collectively gulped and took the deals that were on the table. In the case of AIG the only player that could come up with the money they needed fast enough was the government.
AIG is not garbage and theoretically if the housing market stabilizes by early 09 due to the stopping of sub-prime loans and the bailout, Uncle Sam stands to make a tidy profit from the breakup of the company. AIG has a value of around 150 billion. We paid 80 billion to own 80% of the company. The loan AIG was given is at 11% interest which is loan shark rates. The exorbitant rate of the loan pretty much forces AIG to sell itself quickly.
Not that we’ll ever see any of the profit since it will probably get plowed back in to the bailout plan.
The bailout plan is basically a place for companies to dump all the garbage loans that they were forced to make by the Dems stupid idea of ‘fairness’. In theory, once you clean the crap out, things return back to normal since the the stuff in everyone’s portfolio is valued properly and all the complex leveraging formulas that these guys are operating on make starts to make sense again.
From the banks point of view, since the government forced them to make these stupid loans, the government should clean up the mess.
Not sure where you got that number?
The estimated assets of AIG are in the 1 trillion range.
And, I might add, if the Fed plan works, AIG, which is solvent, will return to normal operations as soon as it gets it's credit ratings back and this may take weeks, months, or years. we just can't predict, but I bought a little of it last week.
if 11% is loanshark rates, what are the 33% credit card rates?
The congressional solution was to mandate a doubling of the monthly minimum that has to be paid...
the credit card companies know a drowning man will grab even the point of a sword.