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Aristotle
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Joined: 05 Dec 2007
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AIG Continues to Be Black Hole for Taxpayer Dollars
PostPosted: Sun Mar 08, 2009 11:14 pm Reply with quoteBack to top

First, read the general description of what AIG did, which the taxpayer is now paying for:

http://www.nytimes.com/2009/03.....et.html?hp

Now, see who is receiving the taxpayer's money:

http://online.wsj.com/article/.....od=testMod

My view: No more taxpayer cash for AIG. Let it fail, and when necessary use FDIC funds to pay depositors of U.S. banks which fail as a consequence.

Both U.S. bank and foreign banks who bought "credit insurance" from AIG knew there were no reserves to back up the credit default swaps or interest rate swaps, and also probably knew that the dollar volume of the risk presented by these transactions was roughly 2 times AIG's net worth. As a result, the U.S. taxpayer should not have a lot of sympathy for banks who had "investment professionals" working for them. Part of one's job as an investment professional is to take a clear eyed look at the risk one's company is taking, and act accordingly. Banks who had incompetent or reckless investment professionals, relying on unreserved swap contracts, deserve to fail.

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Aristotle

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