AIG May Get $85 Billion U.S. Loan in Return for Majority Stake
This is so beyond unacceptable, it actually infuriates me.
Sept. 16 (Bloomberg) — American International Group Inc., the biggest U.S. insurer by assets, has been offered an $85 billion U.S. loan in return for an 80 percent stake in the company, according to a person familiar with the situation.
The Federal Reserve was persuaded to offer the loan because of the risk that an AIG failure would threaten the stability of world financial markets, according to the person, who declined to be identified because negotiations were confidential. Efforts to find a private-sector solution failed because the company is too big and a long-term fix was needed, the person said.
Emphasis mine.
HERE IS THE LONG-TERM FIX, YOU RETARDS: STOP BAILING OUT COMPANIES WHO MAKE IDIOTIC HIGH-RISK BETS WITH NO CONSEQUENCES WHEN THEY FAIL.
Mark Cuban nails it on his blog. When you let companies freeroll the American taxpayer by making high-risk investments/acquisitions, everyone but the upper management loses. These companies CEO’s will walk with tens of millions of dollars of severance for making shitty business decisions. Would you take this job? Of course you fucking would.
The fact that not ONE of the posters on my Livejournal Friends List (Buff is probably sleeping, so he gets a pass) talked about this is unsettling. I just cannot understand people all up in arms about issues that ultimately have no traction (*cough* anything socially-related) in Congress, but don’t give two shits about the systematic destruction of our nation’s economy.
The worst thing about bailouts is even if they end up being profitable for the taxpayers (we won’t know for five years whether the bear stearns buyout was +ev - the govt made money bailing out Chrysler in the late 1970s) is that they have no corrective element. Yeah - the executives and their golden parachutes are annoying; at the end of the day, however, those bonuses and salaries are a drop in the bucket. What’s really terrible is how this paternalism prevents bad businesses from adjusting to the consequences of their bad decisions. I wonder what Detroit would look like today if we hadn’t loaned Chrysler all that dough.
A couple of good editorials on the ethics of bailouts at NYT (surprise) and the http://bigpicture.typepad.com. While it is somewhat impressive how the overly aggressive behavior of the Fed has managed to keep the layoffs, inflation and other short-term consequences at bay; we are going to pay for this later - one way or another (even if all those mortgage backed securities make some of these bailouts profitable).