Sunday, March 1, 2009

So Much for Eliminating Governmental Waste

Calculated Risk reports a Reuters report, "Exclusive: AIG near deal on new terms of bailout", describing more taxpayer rape:

The revised AIG agreement is expected to include an additional equity commitment of about $30 billion, more lenient terms on an existing preferred investment, and a lower interest rate on a $60 billion government credit line, the source said.

The new equity commitment would give AIG the ability to issue preferred stock to the government at a later date, the source said.

The London Interbank Offered Rate floor on the interest rate AIG pays on the government's credit line is expected to be removed under the new terms, which would save the insurer about $1 billion a year, the source said. The company currently pays 3 percentage points above Libor.
AIG will also give the U.S. Federal Reserve ownership interests in American Life Insurance (Alico), which generates more than half of its revenue from Japan, and Hong Kong-based life insurance group American International Assurance Co (AIA) in return for reducing its debt, the source said.

The insurer had been trying to sell Alico and a part of AIA in a bid to raise money to pay back the government.

AIG may also securitize some U.S. life insurance policies and give them to the government to further reduce its debt, the source said.

Last year, AIG said it plans to sell all assets except its U.S. property and casualty business, foreign general insurance and an ownership interest in some foreign life operations, to pay back the government.

While the company has announced some sales, it has been difficult for it to find buyers and get a good price for assets amid the financial crisis. Credit for deals remains difficult to arrange due to the crisis and many would-be buyers are struggling with their own problems.
Both the Federal Reserve, and AIG, once the world's largest insurer by market value, declined to comment.


A new deal would come as the insurer struggles to sell assets amid the financial crisis and prepares to post the largest quarterly loss in corporate history. . .

Will someone please explain how a company with a nominal market value of $1 Billion gets a $30 Billion equity investment?

Also please explain why the Federal Reserve wants to own pieces of businesses that couldn't be sold in the free market.

This is all banksterism. AIG was a nerve center for writing unregulated insurance on credit default swaps, while reserving nothing for this liability. For some reason, Messrs. Bush, Paulson, Bernanke, Geithner and Obama have made this fraudulent insurance business the liability of U.S. taxpayers.

Where are the prosecutions and investigations of this greatest of all heists, the credit meltdown of our era?

The perpetrators get to keep their riches and the public is blandly told by the new Administration that is allotting three-quarters of a trillion dollars this budgetary year alone as a "placeholder" for giveaways to the financial industry that created this mess on its own. The Administration further has the nerve to insist that of this $750 B, only 1/3 of it, or $250 B, should count against the deficit, because 2/3 will be recovered.

Based on the "investments" to date in Citigroup and AIG, there is no reason to think that anything will be recovered.

More phony accounting, now at the Presidential level.

After 9/11, the victims' families pushed for a commission. We are all victims of a multi-trillion dollar fraud. We need a full and fair, impartial commission to investigate this. At the very least, violations of Sarbanes-Oxley are likely to be found.

History rhymes. JFK and especially LBJ led the U.S. into the Viet Nam quaqmire. Yet it was a Republican who suffered the ultimate disgrace for the failure there. There has been no bailout for individuals yet, and perhaps there will be a small one. The more that Barack Obama throws money at the guilty companies in return for worthless equity stakes as the economy descends into a Great Recession or worse, the more he risks the social and environmental goals he says he's for. He will lose both popular support and the ability to finance his programs as he continues the policy of throwing money down ratholes.

It's only money. The world needs to cut the banksters down to size and get on with the legitimate business of satisfying the needs and desires of normal people.

Copyright (C) Long Lake LLC 2009

No comments:

Post a Comment