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AIG's hairball of mess.User Forum Topic
Submitted by flu on November 10, 2008 - 7:46am
I can't believe us taxpayers are on the hook for this..... "New York-based AIG said it lost $24.47 billion, or $9.05 per share, after a profit of $3.09 billion, or $1.19 per share, a year ago. Revenue declined 97 percent to $898 million from $29.84 billion in the third quarter 2007. "This is the largest quarterly loss we've ever reported," Chief Financial Officer David Herzog told investors on a conference call." .... And more interestingly..... The results come as the U.S. government also Monday announced a restructuring of a bailout plan for the troubled insurer, boosting aid to the company to around $150 billion The Fed earlier this year said it would offer two loans totaling $123 billion to AIG. The insurance company was later allowed to access another $20.9 billion through the Fed's "commercial paper" program. Through that program, the Fed is buying mounds of companies' short-term debt often used for crucial day-to-day expenses, such as payrolls and supplies. Monday's restructuring provides AIG with easier terms on the Fed loans. The new package reduces the interest rate AIG will pay and extends loan terms to five years from two years, reducing the need for AIG to sell off business lines and other assets at firesale prices in order to repay the government. Wow, that's sort of a departure from the original terms of the initial bailout....Didn't Paulson say
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Could the government do a WaMu type takeover of AIG, wiping out the debt, then breaking up AIG to cover the loan and the remaining liabilities?
OT, look at Granny getting whacked. Wow.
I think it's pretty safe to assume that anything that comes out of the Treasury and Fed will turn out to be inaccurate. Maybe they are just bad at math?
But don't worry the banksters are taken care of.
http://www.washingtonpost.com/wp-dyn/con...
The financial world was fixated on Capitol Hill as Congress battled over the Bush administration's request for a $700 billion bailout of the banking industry. In the midst of this late-September drama, the Treasury Department issued a five-sentence notice that attracted almost no public attention.
But corporate tax lawyers quickly realized the enormous implications of the document: Administration officials had just given American banks a windfall of as much as $140 billion.
The sweeping change to two decades of tax policy escaped the notice of lawmakers for several days, as they remained consumed with the controversial bailout bill. When they found out, some legislators were furious. Some congressional staff members have privately concluded that the notice was illegal. But they have worried that saying so publicly could unravel several recent bank mergers made possible by the change and send the economy into an even deeper tailspin.
"Did the Treasury Department have the authority to do this? I think almost every tax expert would agree that the answer is no," said George K. Yin, the former chief of staff of the Joint Committee on Taxation, the nonpartisan congressional authority on taxes. "They basically repealed a 22-year-old law that Congress passed as a backdoor way of providing aid to banks."
The story of the obscure provision underscores what critics in Congress, academia and the legal profession warn are the dangers of the broad authority being exercised by Treasury Secretary Henry M. Paulson Jr. in addressing the financial crisis. Lawmakers are now looking at whether the new notice was introduced to benefit specific banks, as well as whether it inappropriately accelerated bank takeovers.