AIG bailout
The American International Group said on Friday that it had already drawn down $61 billion of the $85 billion emergency bridge loan it received from the Federal Reserve two weeks ago, an announcement that startled credit ratings agencies.
Looks as though things got out of control:
"The $61 billion draw to date on the facility is much larger than we had previously anticipated," said Rodney A. Clark, an analyst with Standard & Poor’s, explaining the change in outlook.
A.I.G. is required to pay back its borrowings from the Fed within two years. Mr. Clark said that to raise the money, the rapid drawdown of the loan made it likely that A.I.G. would have to sell off more businesses than Standard & Poor’s had expected.
This would leave "a much smaller and less diversified A.I.G." to pay off a proportionally bigger debt to the Fed, Standard & Poor’s said in a statement.
Will AIG be the next deadbeat player? Read about it below the fold.
Compare and contrast: AIG bailout :
Less than two weeks after Uncle Sam gave American International Group (AIG) an $85 billion loan - staving off financial collapse - execs from one of its insurance subsidiaries, AIG American General, gathered for a conference at the uber-swank St. Regis Monarch Beach Resort, billed as "California’s only Mobil Travel Guide Five-Star Resort," where ocean-view rooms start at $565 a night and "world class luxury" is the rule.
The best deals give no surprises, and there's no surprise here. AIG will NOT repay $85 billion, and it doesn't look much as though they ever intended to.
What's going on? Paulson's bailout failed on Monday but your tax dollars - newly printed, erm, £620 billion of them actually, propped up the market while gang members withdrew their bets. Then on the Friday, lo, Paulson's bailout bill passed, and yet another £700 bln bailed out bad banks.
Do these sums add up? If so, what to? I make it $1.32 Trillioni.