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Anywho6 Donating Member (458 posts) Send PM | Profile | Ignore Tue Sep-16-08 07:23 PM
Original message
Federal takeover of AIG planned
Source: CNNMoney.com

Federal officials reportedly may take 80% stake in the nation's largest insurer in an $85 billion rescue plan to prevent financial chaos worldwide.
By Tami Luhby, CNNMoney.com senior writer
Last Updated: September 16, 2008: 8:15 PM EDT

NEW YORK (CNNMoney.com) -- The federal government is reportedly on the verge of taking over crumbling insurer American International Group in an $85 billion deal that could leave the company in the Federal Reserve's hands.

According to published reports late Tuesday, officials decided they must act lest the nation's largest insurer file bankruptcy. Such a move would roil world markets since AIG (AIG, Fortune 500) has $1.1 trillion in assets and 74 million clients in 130 countries.

The plan calls for the Federal Reserve to take an 80% stake in AIG. The insurer's assets would be used to secure the loan, the New York Times reported.

The government had resisted getting involved, hoping to entice Wall Street to set up a $75 billion rescue fund for the firm. But by Tuesday night, it became clearer that the financial industry would not do so, according to reports.

Read more: http://money.cnn.com/2008/09/16/news/companies/AIG/inde...
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neverforget Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Sep-16-08 07:27 PM
Response to Original message
1. Awesome! just put it on the credit card and keep it off budget and
everything will be okay........ :sarcasm: :argh:
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lcdnumber6 Donating Member (232 posts) Send PM | Profile | Ignore Tue Sep-16-08 08:34 PM
Response to Reply #1
26. KILLER McCain Palin image.
may I pass along to others?
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dysfunctional press Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Sep-16-08 07:27 PM
Original message
socialize the risk, privatize the profits.
that's why they love doing business in the u.s. of a.
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DJ13 Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Sep-16-08 07:27 PM
Response to Original message
2. Privatize the profits, socialize the risk
Whats in it for the average American?

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Anywho6 Donating Member (458 posts) Send PM | Profile | Ignore Tue Sep-16-08 07:31 PM
Response to Reply #2
5. Besides a much higher tax bill and debt for generations?
I'd like to know if the government will own 80% of AIG, doesn't that mean that all of us little people who own shares of AIG either outright or via mutual funds will be pushed out? Does everyone just get $2 a share and a pat on the head?

Sweet. The biggest insurance company in the world will be owned by the U.S. government. What's next?
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margotb822 Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Sep-16-08 08:21 PM
Response to Reply #2
23. Who said socialize!?
Republicans aren't socialists!

It's the Dems fault!!

:sarcasm:

It won't even make a dent in this: http://reaganbushdebt.org /


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Purveyor Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Sep-16-08 07:28 PM
Response to Original message
3. I hope this thread doesn't get 'locked' like the last one on this topic...
Just saying.
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Anywho6 Donating Member (458 posts) Send PM | Profile | Ignore Tue Sep-16-08 07:32 PM
Response to Reply #3
6. Why did that happen? n/t
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Lone_Star_Dem Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Sep-16-08 07:34 PM
Response to Reply #3
7. The last one had an incorrect link issue.
Which they were asked to fix three times.
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Anywho6 Donating Member (458 posts) Send PM | Profile | Ignore Tue Sep-16-08 07:45 PM
Response to Reply #7
12. Thank you! n/t
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Lone_Star_Dem Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Sep-16-08 07:49 PM
Response to Reply #12
13. You're very welcome! nt
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madrchsod Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Sep-16-08 07:30 PM
Response to Original message
4. the american taxpayers now own 80% of aig!
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ozone_man Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Sep-16-08 07:35 PM
Response to Original message
8. But where does the money come from?
:shrug:

To provide golden parachutes for these CEOs, it comes from us lowly tax payers.

I'd be very interested to hear Obama speak up about these FED bailouts and how it is taxpayers who foot the bill.
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TomInTib Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Sep-16-08 07:35 PM
Response to Original message
9. I'll bet Gus Wortham is spinning in his grave.
If he was alive today, he would be kicking ass and taking names.
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scarface2004 Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Sep-16-08 07:43 PM
Response to Original message
10. typical republican bullshit deal!!
privatize profit...socialize loss!!
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roamer65 Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Sep-16-08 07:44 PM
Response to Original message
11. I wholeheartedly agree with the Federal Reserve move on AIG.
Edited on Tue Sep-16-08 07:47 PM by roamer65
But its still not enough. The Federal Reserve needs to begin to monetize trillions worth of this bad paper. It needs to be converted into capital to stop the massive deleveraging that is taking place.

A failure of AIG would have taken the contagion right into the credit derivatives market. Bad stuff, folks.
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SmokingJacket Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Sep-16-08 07:54 PM
Response to Reply #11
14. You sound like you know what you're talking about...
Could you explain to those of us with English majors why it's a good thing??

Thanks!
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roamer65 Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Sep-16-08 08:14 PM
Response to Reply #14
19. Converting bad paper into dollars will begin to recapitalize financial institutions.
Edited on Tue Sep-16-08 08:21 PM by roamer65
Right now, the financial and banking system needs to literally choke on extra cash. Simply put, they'd then have no choice but to issue loans and we would begin to see an end to the credit crisis.

A bridge loan to AIG will ensure the orderly disposition of its assets, instead of a fire sale. I suspect the Fed will actually make a great deal of money from AIG in the long run. Too bad we wouldn't turn it into a nationalized insurance company that would provide lower cost insurance to the people.
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cottonseed Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Sep-16-08 08:58 PM
Response to Reply #19
30. Bookmarking this, because it's an incredible suggestion.
Don't know much about how it would work, if you'd like to expand that would be great, otherwise, thanks just for the post.


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roamer65 Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Sep-16-08 09:10 PM
Response to Reply #30
31. Simple Keynesian economics.
Edited on Tue Sep-16-08 09:16 PM by roamer65
I am a strong believer in old style Keynesian economics. :-)

http://en.wikipedia.org/wiki/Keynesian

Paulson and NY Fed President Geithner made a Keynesian move in regards to the AIG loan.

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Renew Deal Donating Member (1000+ posts) Send PM | Profile | Ignore Wed Sep-17-08 09:12 AM
Response to Reply #11
41. So we delay the disaster
Until a new president takes place? This is the most anti-capitalist stuff I have ever seen in this country.
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paparush Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Sep-16-08 07:55 PM
Response to Original message
15. Then they better nationalize that bitch.
Gods almighty.
Between the wars, the military budget, and the endless Public Bailout of the Private Profiteers...there can't be much left.

Surely China, Japan, India, et al, gotta be close to cutting off the flow of cash????
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Oregone Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Sep-16-08 07:58 PM
Response to Original message
16. Does this mean AIG profits are directed into the national budget?
Same question about the other takeovers...


If so, well, yes it sucks that people aren't being held responsible for their shitty supply-side crap policies, but, on the other hand, the People just got a potentially profitable asset.
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roamer65 Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Sep-16-08 09:24 PM
Response to Reply #16
35. ...or turn it into a non-profit, low cost insurance provider!
;)
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alfrankenaynrand Donating Member (25 posts) Send PM | Profile | Ignore Tue Sep-16-08 08:08 PM
Response to Original message
17. It was the right thing to do
I am no socialist and I am not in favor of the government bailing out corporations. But, to allow AIG to fail would have repercussions that would be hard to calculate. Besides, it makes the case for saving GM and Ford, which will save a lot of union jobs (and that fellow Democrats is a good thing). Senator Richard Shelby (R) from Alabama said today that the government should let the market take care of all of this. He would stand by and let the economy go into the toilet. That attitude is what got us in trouble in the first place. Shelby is lacking in any understanding of the economy, the "market", or the working man. Alabama should vote that guy out of office.
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unkachuck Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Sep-16-08 09:23 PM
Response to Reply #17
34. confess....
....aren't you really a 'trickled-down' socialist?

"...not in favor of the government bailing out corporations. But,"

....there always seems to be a big 'But'
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high density Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Sep-16-08 08:13 PM
Response to Original message
18. Umm, why don't the Feds take over some profitable businesses first?
We need some way to pay for this.
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sop Donating Member (62 posts) Send PM | Profile | Ignore Tue Sep-16-08 08:24 PM
Response to Reply #18
24. They should nationalize the oil companies
Or, at the very least, set up some kind of plan like they have had in Alaska for years where they tax the hell out of them and distribute the money to the residents. Talk about privatizing the profits...why should this country's natural resources belong to private entities?
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mia Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Sep-16-08 08:18 PM
Response to Original message
20. AIG: "The New Enron"
July 25, 2008. By Heidi Turner RSS Del.icio.us Seed Newsvine Facebook

New York, NY: Another day, another large company allegedly violating ERISA laws. This time, the company in question is AIG (American International Group Inc.). AIG faces multiple lawsuits regarding its handling of employee investments.

While one lawsuit is near settlement, the other is just getting under way.
AIG may have settled one class action lawsuit. On July 3, 2008, a judge granted preliminary approval of a Settlement Agreement between AIG and a group of plaintiffs who filed an ERISA lawsuit against the company. The lawsuit involves participants or beneficiaries of the AIG Incentive Savings Plan, the American General Employees' Thrift and Incentive Plan, the American General Agents' and Managers' Thrift Plan and the CommoLoCo Thrift Plan. Plaintiffs in that lawsuit alleged that AIG breached its fiduciary duty by failing to prudently and loyally manage the plans and the plans' assets, failing to provide participants with accurate information and knowingly participating in a breach of duty.

As part of the settlement, AIG will pay $24.2 million in cash. A Fairness Hearing will be held in October to determine whether or not to grant final approval of the settlement. The lawsuit included plan participants of various dates up to May 31, 2005.
AIG now faces a new lawsuit that alleges the company overstated its earnings and lied to investors about the stability of its plans. The company allegedly assured people that the plans were secure even though its portfolio was enduring huge losses. Such misstatements are a breach of fiduciary duty under ERISA laws. Rather than acting in the best interests of investors, AIG fiduciaries are accused of acting in their own best interests.

The class action lawsuit has numerous organizations vying to become lead plaintiff, including the State of Michigan Retirement Systems, The Jacksonville Police and Fire Pension Fund and the Ontario Teachers Pension Plan Board all want to become lead plaintiff in the case....

http://www.lawyersandsettlements.com/features/aig-stock...


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drm604 Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Sep-16-08 08:20 PM
Response to Original message
21. Not a good thing but
quite possibly the least bad of nothing but bad alternatives.

I just hope to God that lessons have been learned and that we have sufficient proper regulation in the future.
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Renew Deal Donating Member (1000+ posts) Send PM | Profile | Ignore Wed Sep-17-08 09:14 AM
Response to Reply #21
43. Since when is it good to nationalize failing corporations?
This is the most anti-capitalist time in my memory. I can't believe that this is being allowed.
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drm604 Donating Member (1000+ posts) Send PM | Profile | Ignore Wed Sep-17-08 11:48 AM
Response to Reply #43
44. I didn't say it was good.
I said that it was not good, but may be the least bad of all of the alternatives.
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Odin2005 Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Sep-16-08 08:20 PM
Response to Original message
22. Good. NATIONALIZE! NATIONALIZE! NATIONALIZE!
Edited on Tue Sep-16-08 08:21 PM by Odin2005
If it's too big to fail it's too big to be a privately owned.
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roamer65 Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Sep-16-08 08:25 PM
Response to Reply #22
25. Damn straight.
Edited on Tue Sep-16-08 08:27 PM by roamer65
I think AIG should now become a public-owned, lower cost, insurance provider. Imagine what socialists like us could do with a company like this one. :evilgrin:
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spotbird Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Sep-16-08 08:36 PM
Response to Reply #22
27. NAZI=Corporatism. nt
Edited on Tue Sep-16-08 08:36 PM by spotbird
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psychopomp Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Sep-16-08 08:36 PM
Response to Reply #22
28. Then why is the Federal Reserve getting control?
The Fed is a private organization.
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anneboleyn Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Sep-16-08 08:50 PM
Response to Original message
29. This is breaking news on CNN now -- how can anyone think the economy is "sound?" Amazing. n/t
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boomerbust Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Sep-16-08 09:11 PM
Response to Original message
32. Thats exaclty what was said
About Bear Stearns. It would stop the domino, but they are still falling.
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Purveyor Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Sep-16-08 10:47 PM
Response to Reply #32
38. Indeed but still there are many 'bloodsuckers' with paid lobbiest and clout that need to be 'saved'.
We, the lowly 'unwashed' are so fucked no one can not even comprehend.

Only the 'chosen few' are grinning 'ear-to-ear'...
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BeyondGeography Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Sep-16-08 09:16 PM
Response to Original message
33. Guess that makes us all proud owners of non-collateralized mortgage debt
I'm psyched.
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jimlup Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Sep-16-08 09:45 PM
Response to Original message
36. This is final proof that Capitalism works!
:rofl:
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dixiegrrrrl Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Sep-16-08 09:49 PM
Response to Original message
37. This is very very misleading...
It says..
" The federal government is reportedly on the verge of taking over (AIG)
in a deal that could leave the company in the Federal Reserve's hands."

The Federal government is us, tax payers.
Federal Reserve is not the government, it is a private bank which, to date,
has been allowed to "own"Fannie Mae, Freddie Mac, now AIG.

Our government is putting up the money for a private bank to own investment banks, in essence.
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OneBlueSky Donating Member (1000+ posts) Send PM | Profile | Ignore Wed Sep-17-08 09:06 AM
Response to Original message
39. so Bush's "no more bailouts" pledge lasted, what, less than 24 hours? . . . n/t
.
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Renew Deal Donating Member (1000+ posts) Send PM | Profile | Ignore Wed Sep-17-08 09:11 AM
Response to Original message
40. Will this be the national insurance company?
:wtf:

Bush sounds more like Chavez every day.
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alcibiades_mystery Donating Member (1000+ posts) Send PM | Profile | Ignore Wed Sep-17-08 09:13 AM
Response to Reply #40
42. Insurance De-demutualization
:rofl:
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