I spoke too soon yesterday. After Treasury Secretary Paulson apparently refused to bail out AIG, the Federal Reserve stepped in and cut the mortgage giant a check for $85 billion in exchange for 80 percent of AIG shares. That $85 billion of taxpayer money is just a loan, we are told, but I don’t quite understand the distinction between and loan and a handout when the whole trigger for this loan was that AIG is unable to pay back its other loans.
Once again, this is being covered everywhere in the MSM. Here’s a good overview.
Although a cut in the Fed funds rate had become widely expected by yesterday, the Fed ended up holding rates steady. Perhaps they are trying to limit themselves to one Wall Street bailout per day.
Today is a new day, however.