Posted on 03/09/2009 4:44:57 PM PDT by JRochelle
An AIG report to the Treasury Department last month warned that if the government didn't come to its rescue again, its collapse would trigger a "chain reaction of enormous proportion" that would "potentially bankrupt or bring down the entire system" and make it impossible for AIG to repay the billions it already owed the U.S. government.
A draft report, obtained by ABC News, and marked "strictly confidential," said, "the failure of AIG would cause turmoil in the US economy and global markets, and have multiple and potentially catastrophic unforeseen consequences."
Four days later, AIG was given $30 billion in federal aid on top of the $130 billion it had already received.
The draft was dated Feb. 26. On March 2, the Treasury Department and the Federal Reserve system announced that AIG, which lost $61.7 billion in the fourth quarter of 2008, would receive $30 billion in new government help.
AIG warns in its report of the "systemic risk" that a potential collapse posed. It describes a "systemic risk" as one that "could potentially bankrupt or bring down the entire system or market."
The company said, "What happens to AIG has the potential to trigger a cascading set of further failures, which cannot be stopped except by extraordinary means."
"The inability of AIG to immediately secure additional assistance from the Federal Reserve and the Department of the Treasury threatens not only AIG's sales process, but also consumer and business confidence around the world," it said.
The report referred to the unexpected downward economic spiral after the Fed allowed Lehman Brothers, the giant investment bank, to collapse last fall. AIG said the damage to credit market would "dwarf the Lehman fallout."
The Treasury Department told ABC News it would have no comment on the report, and the White House referred questions to
(Excerpt) Read more at abcnews.go.com ...
These clowns don't know if they are coming or going. The government is controlled by a gang of thugs and fools.
AIG needs to sell off some of the companies it owns. I’m sorry that the market for these holdings is not exactly prime time, but either they sell off pieces to folks who can pay real money or they let a bankruptcy judge do it.
Thugs and fools fall by the wayside everyday.
Congress is forever. Their check, perks, pensions, that of their staff all come in more regular than ancient tribute to a Roman Emperor.
You owe an apology to the almost free market risk that thugs and fools take, as opposed to the narcotic comforts of Congress.
The ones that are already gone “wouldn't play” and took the poison pill.
I sounds too much like what went on in the early 80’s with the “recall” forced by the feds to call in private bank loans (aka Carter Crash).
If AIG fails, so what?
The insurance business certainly seem profitable enough, that annoying lizard and duck are on TV 24/7 hawking policies.
Others can , and seem perfectly willing and even anxious, to take their place.
I’ve read that AIG insures the Congresscritters. Does anyone know if this is true? If so, it explains a lot.
Leftist (Union pension funds), the Saudi’s, Chinese, and select other groups) stood to lose the most, hence the bailouts.
A lot of banks could go under.
Credit default swaps were used in lieu of financial reserves to cover bond issues. If enough bonds default and AIG cannot cover their CDS exposure, that will ripple into banks and take many of them down.
Thank Phil Gramm for that one. He stuck a provision in the Commodities Futures Modernization Act that mandated no regulation for credit default swaps. So AIG just issued them left and right without adequate capitalization and/or hedging.
I heard an ABC report on the radio that said AIG basically said:
“Give us the money or we shoot the Puppy”
Excellence in reporting
I agree. It seems Obama and the MSM are demonizing business
they have no incentive to improve their performance and try to make a profit while they are being bailed out.
It’s more than that now... it’s an all out war on capitalism and success.
Gee ya think?
It hardly seems like an empty threat to me.
No wonder nobody wants to join Geithner in Treasury...
Something stinks? 1st Bernanke and Paulson, now Bernanke and Geithner. More change you can believe in. Omessiah isn’t doing anything that Jorge didn’t do and refuses to make the Fed Reserve stop this BS. It’s an ongoing crush from AIG’s CDS insane leverage. They were supposed to unwind them last year. If they haven’t there will be continued pain and multibillion $ losses. $T in CDS’s backed by $B’s in assets is a receipe for Depression.
This schit (CDS’s) is the devil pure and simple.
It could easily be unrecoverable. It certainly is not recoverable if it is ignored much longer.
blame gorge, blame gorge, blame gorge.
another broken record plays a tune for ‘obama the great’
AIG will never be allowed to fail. The foreign banks and investors bought those high risk mortgage backed securities. Because they were high risk, the investors bought insurance on them from AIG.
A whole new concept, nothing to do with consumer car insurance etc.
When the mortgage securites crashed, AIG was on the hook for more than they could ever pay. Correct me if im wrong, but i think i read by a factor of 25 to 1 or something.
The bailouts for AIG are then funneled, via AIG, straight to foreign investment bankers as insurance policy payouts. THIS is why the use of the bailout is secret.
OUR tax dollars are in effect, being used to bail out foreign banks who made a high risk investment. If the true story was understood, i think it would spark a true overthrow of our government by taxpayers. By what logic do my tax dollars get used to bail out a high risk investor in Europe somewhere?
And i agree with you, so what If AIG fails? Some foreign investors and banks go down. They learn a lesson. World goes on.
And i think Obama was deliberately flooded with cash, propped up, and installed by these investors who knew this day was coming and wanted a monkey on a string they could control.
Yeah,,monkey.
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