Sunday, March 1, 2009

Bend over everybody! Feds offer $30 billion more of your money to keep AIG afloat after losses

The pain you're feeling now in your derriere is the federal government agreeing this weekend to give another $30 billion of your money to keep giant insurer AIG afloat.

Your tax dollars have already purchased 80 percent of the holding company. Yet still, the insurer needs more to cover its losses. Sounds like a bad investment to me.

This kind of spending is simply madness.

The Times reports tonight:

The federal government agreed Sunday night to provide an additional $30 billion in taxpayer money to the American International Group and loosen the terms of its huge loan to the insurer, which is preparing to report a $62 billion loss on Monday, the biggest quarterly loss in history, people involved in the discussions said.

The intervention would be the fourth time that the United States has had to step in to help A.I.G., the giant insurer, avert bankruptcy. The government already owns nearly 80 percent of the insurer’s holding company as a result of the earlier interventions, which included a $60 billion loan, a $40 billion purchase of preferred shares and $50 billion to soak up the company’s toxic assets.

Federal officials, who worked feverishly over the weekend to complete the restructuring, said they thought they had no choice but to prop up A.I.G., because its business and trading activities are so intricately woven through the world’s banking system.

But the deal also presents more financial risks to taxpayers at a time when the public and Congress have been sharply questioning the wisdom of risking federal money to bail out private enterprises.

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