Thread: Bernanke - Paulson - Geithner ; a bipartisan triumph at AIG

Meh. I'm sure all those at AIG just feel so much better now knowing that the government will backstop any colossal new screw up they can possibly engineer. All the more reason to take bigger and bigger risks with more and more money, no reason not to at this point. The incentive for curbing overly risky bets in the now casino banking and re-insurance no longer exist. Expect the tax payer to pay for it again, just as long as they get their billions.

I am writing a letter today to the oval office and citing my displeasure, because I had been convinced by the cons that obama was a socialist. Now he goes and makes money for the gov't by selling those gov't held shares! WTF!! Doesn't obama know that socialism is gov't ownership of AIG and everything else??? What kinda socialist is this? He gives socialism a really bad name, acting like a capitalist and all, one might say, he was a republican in nature, although perhaps the dastardly moderate republican sort.

Let's see, he killed OBL, he is getting us out of afganistan, he got us out of Iraq, he has killed around 2000 AQ, and he saved the nation from crashing to the ground by helping out the banks, and now he is making money for america on that bailout!!

This guy just ain't as bad as the repubs wish him to be. He may go down in history as one of the better presidents once everything is said and done. And the repubs of his terms in office will go down as spoiled little brats, unable to lead, and too bratty to stand behind someone who will lead.

And he was able to accomplish all of this, while the repubs worked as hard as they could to throw a wrench in his gears. Quite an accomplishment, I say. Hail to the Chief!

Originally Posted by eohrnberger

Meh. I'm sure all those at AIG just feel so much better now knowing that the government will backstop any colossal new screw up they can possibly engineer. All the more reason to take bigger and bigger risks with more and more money, no reason not to at this point. The incentive for curbing overly risky bets in the now casino banking and re-insurance no longer exist. Expect the tax payer to pay for it again, just as long as they get their billions.

ahoy Eric,

the government, one way or the other, must provide some sorta backstop fer some 'o these financial institutions, me friend...i mean, some 'o them be just very, very huge.

The fundamental issue is that a few banks have grown to be enormous over the last two decades. According to SNL Financial, four banks each had more than a trillion dollars in assets at the beginning of the year. JPMorgan Chase was the largest with $2.3 trillion in assets, while Bank of America had about $2.2 trillion in assets and Citigroup, $1.9 trillion. Goldman Sachs is fourth with about $950 billion in assets.

the much villified Dodd-Frank does attempt to address this issue, aye;

It means more governmental red tape for these banks, but also ostensibly fewer problems because of it. Regardless, one purpose of this increased regulation is to impose a regulatory tax on big banks to push them to be smaller.

Second, Dodd-Frank addresses the “Lehman” problem — that bankruptcy may not work for a huge financial failure. Instead, a new regime is created to put big institutions into what is hoped to be an orderly receivership that avoids a general financial panic, something that unfortunately happened when Lehman Brothers filed for bankruptcy in September 2008.

Despite Its Problems, Dodd-Frank Is Better Than the Alternatives - NYTimes.com

'tis imperfect, but the option would be fer big government to come in and break up them banks - imma not sure thats what some folks on USPO wanna see, though.

despite all 'o these issues, i think the story 'o AIG be a good one, or at least the result hath been as good as we could hope fer. a story that perhaps runs conflict to the idear that "the Federal Government is always bad", aye!

“It really stuck in the public’s craw that trillions of dollars of financial support were being provided to the commanding heights of the American financial system, and those guys were still paying themselves huge bonuses,” said Jim Millstein, the former Treasury chief restructuring officer and now CEO of advisory firm Millstein & Co. “I have real sympathy with the public in this regard.”

“The government set out to prevent the collapse of the financial system,” Millstein said. “They did it over two administrations extraordinarily effectively and without cost to taxpayers.”

AIG Bailout That Angered Bernanke to End With U.S. Sale - Bloomberg

*cheers*

- MeadHallPirate

Hmmm. I wonder if the profit on AIG will offset the losses in the energy sector and GM stock? Is the net balance sheet a profit, or a loss?

Originally Posted by Blue Doggy

I am writing a letter today to the oval office and citing my displeasure, because I had been convinced by the cons that obama was a socialist. Now he goes and makes money for the gov't by selling those gov't held shares! WTF!! Doesn't obama know that socialism is gov't ownership of AIG and everything else??? What kinda socialist is this? He gives socialism a really bad name, acting like a capitalist and all, one might say, he was a republican in nature, although perhaps the dastardly moderate republican sort.

Let's see, he killed OBL, he is getting us out of afganistan, he got us out of Iraq, he has killed around 2000 AQ, and he saved the nation from crashing to the ground by helping out the banks, and now he is making money for america on that bailout!!

This guy just ain't as bad as the repubs wish him to be. He may go down in history as one of the better presidents once everything is said and done. And the repubs of his terms in office will go down as spoiled little brats, unable to lead, and too bratty to stand behind someone who will lead.

And he was able to accomplish all of this, while the repubs worked as hard as they could to throw a wrench in his gears. Quite an accomplishment, I say. Hail to the Chief!

ahoy Blue Doggy,

WASHINGTON — The global financial system was teetering on the edge of collapse when President Bush and his economics team huddled in the Roosevelt Room of the White House for a briefing that, in the words of one participant, “scared the hell out of everybody.”
It was Sept. 18. Lehman Brothers had just gone belly-up, overwhelmed by toxic mortgages. Bank of America had swallowed Merrill Lynch in a hastily arranged sale. Two days earlier, Mr. Bush had agreed to pump $85 billion into the failing insurance giant American International Group.

The president listened as Ben S. Bernanke, chairman of the Federal Reserve, laid out the latest terrifying news: The credit markets, gripped by panic, had frozen overnight, and banks were refusing to lend money.

Then his Treasury secretary, Henry M. Paulson Jr., told him that to stave off disaster, he would have to sign off on the biggest government bailout in history.

Mr. Bush, according to several people in the room, paused for a single, stunned moment to take it all in.

“How,” he wondered aloud, “did we get here?”

http://www.nytimes.com/2008/12/21/bu...anted=all&_r=0

though President Bush seemed to be utterly surprised by the financial meltdown (some 'o our forum folks, like FranticFranny, saw this comin' a mile away afterall), i credit him fer bein' docile and followin' the leads 'o Mr. Paulson and Mr. Bernanke.

i also tip the cap to our President, Mr. Obama and Secretary Geithner fer seein' things through and protectin' the interests 'o the taxpayers in the case 'o A.I.G.

a good story, aye!

- MeadHallPirate

Originally Posted by MattInFla

Hmmm. I wonder if the profit on AIG will offset the losses in the energy sector and GM stock? Is the net balance sheet a profit, or a loss?

ahoy MattLarson,

the tale 'o GM isn't yet o'er yet, me hearty.

imma too lazy to look up the details, but GM attempted a massive stock buyback recently...an effort that was blocked by the Government, fer such a buyback would allow the GM ownership to reap a huge taxpayer windfall when the stock value fully recovers.

still, the A.I.G. story be a good one - a bright light amid all the doom and gloom, aye?

aye!

- MeadHallPirate

Originally Posted by MeadHallPirate

ahoy MattLarson,

the tale 'o GM isn't yet o'er yet, me hearty.

imma too lazy to look up the details, but GM attempted a massive stock buyback recently...an effort that was blocked by the Government, fer such a buyback would allow the GM ownership to reap a huge taxpayer windfall when the stock value fully recovers.

still, the A.I.G. story be a good one - a bright light amid all the doom and gloom, aye?

aye!

- MeadHallPirate

Actually the buyback was turned down because the government would have taken a huge loss. As far as AIG is concerned, China evidently likes it.

Chinese Group Buys 80% of AIG Plane Unit for $4.2 Billion

A Chinese group agreed to buy 80.1 percent of American International Group Inc. (AIG)’s plane-leasing unit for $4.23 billion in the nation’s largest acquisition of a U.S. company.

Chinese Group Buys 80% of AIG Plane Unit for $4.2 Billion - Bloomberg

Originally Posted by OldmanDan

Actually the buyback was turned down because the government would have taken a huge loss.

ahoy OldmanDan,

errrm...thats what i said, matey.

the Government (bein' "the people", the taxpayers who bailed out GM) woulda taken a huge loss.

so, good work by the Federal Government again, aye?

*slaps his hand to his forehead*

Jeebus matey, this be good news. smile! President Bush did what was necessary and signed off on the biggest Federal bailout in the history 'o the United States and his successor, President Obama, has seen the process through at A.I.G. and protected taxpayers in the process.

YARRRR!!!!

- MeadHallPirate

IMO, losing heavy manufacturing capability (GM) would be a blow to national security because if there ever is ramping up for another big conventional war we will need as much heavy industry as we can. Also, as a side-effect, the bailout of GM saved lots of jobs among common citizens of the working class, jobs that wouldn't translate well into other industries.

By contrast, saving a banking/insurance company wasn't vital to national security since we've got plenty of other banks and shitloads of money (and we can always print more!). The number of workers lost would be miniscule compared to GM (10 GM workers for every AIG worker), and most of those banking industry types would be absorbed into other financial industry jobs.

So while a bit of profit is nice as an accident, the government isn't in the business of turning a profit. The government's job is to promote national security. Now you might argue that saving the financial sector was in our national security interests ... but if that's so, then why do we continue to allow the existence of "too big to fail" banks?

Originally Posted by Disillusioned_1

IMO, losing heavy manufacturing capability (GM) would be a blow to national security because if there ever is ramping up for another big conventional war we will need as much heavy industry as we can. Also, as a side-effect, the bailout of GM saved lots of jobs among common citizens of the working class, jobs that wouldn't translate well into other industries.

By contrast, saving a banking/insurance company wasn't vital to national security since we've got plenty of other banks and shitloads of money (and we can always print more!). The number of workers lost would be miniscule compared to GM (10 GM workers for every AIG worker), and most of those banking industry types would be absorbed into other financial industry jobs.

So while a bit of profit is nice as an accident, the government isn't in the business of turning a profit. The government's job is to promote national security. Now you might argue that saving the financial sector was in our national security interests ... but if that's so, then why do we continue to allow the existence of "too big to fail" banks?

ahoy Disillusioned_1,

i agree that savin' GM was critical and the grievance o'er the company bein' saved be purely a partisan one. i mean, thar be folks who are literally hopin' that GM collapses, just to provide'm with more shells to lob at the skipper, Mr. Obama. 'tis very silly, but also very odd stuff goin' on.

regardin' the bi-partisan effort, wonderfully o'erseen by the Federal Government (which imma told time and time again is incompetent) to save A.I.G. and Wall Street on the whole - i agree that new banks with new financiers woulda appeared to start anew, but i had no interest in livin' through an outright collapse to get to that point.

imma too selfish and too much 'o a short term thinker to want to endure such a thing in me prime earnin' years, so kudos to Mr. Paulson...cheers to Mr. Geithner and Mr. Obama...and hats off to Mr. Bernanke. i want to say somethin' nice 'bout Mr. Bush here, in the spirit 'o bein' even handed, but he had no inkling that the economy was about to evaporate - he seemed kinda lost and o'erwhelmed by the moment...but still, he did the right thing in signin' the biggest Federal bailout in the history 'o the United States, so good job by him also, sorta.

rawr!

- MeadHallPirate

You both are of the opinion that if Obama hadn't stepped in, GM would have ceased all operations and would have ceased to exist?

The bankruptcy courts would have handled this the same as they handle all the other bankruptcies. GM would have still continued to operate. No one in business in their right mind would have allowed the money making assets to lay around and rot. They would have continued operation, and less core assets would have been sold off, the company would have restructured, product lines would have been rationalized, changes in executive leadership would have occurred (sound familiar yet?)

The only significant difference is that the UAW wouldn't have received preferential treatment above and beyond their right or their standing, which in the Obama orchestrated bankruptcy, they most certainly did.

Originally Posted by eohrnberger;2135155[B

]You both are of the opinion that if Obama hadn't stepped in, GM would have ceased all operations and would have ceased to exist?

The bankruptcy courts would have handled this the same as they handle all the other bankruptcies[/B]. GM would have still continued to operate. No one in business in their right mind would have allowed the money making assets to lay around and rot. They would have continued operation, and less core assets would have been sold off, the company would have restructured, product lines would have been rationalized, changes in executive leadership would have occurred (sound familiar yet?)

The only significant difference is that the UAW wouldn't have received preferential treatment above and beyond their right or their standing, which in the Obama orchestrated bankruptcy, they most certainly did.

ahoy Eric,

respectfully, the bolded isn't me understandin' 'o what woulda happened.

the banks woulda never lent the kinda money that GM needed to save itself....not unless the Federal Government came in and backed that note up - then the banks woulda lent GM the monies. see, if that happened, it woulda been the public takin' the risk and the private sector scoopin' up the gains...and thats unacceptable to me, aye.

i prefer the A.I.G. model 'o bailout, whar the public takes the risks but also reaps the benefits 'o the risks taken - without the bankin' middlemen to gorge on thar share.

- MeadHallPirate

Originally Posted by MeadHallPirate

ahoy Eric,

respectfully, the bolded isn't me understandin' 'o what woulda happened.

the banks woulda never lent the kinda money that GM needed to save itself....not unless the Federal Government came in and backed that note up - then the banks woulda lent GM the monies. see, if that happened, it woulda been the public takin' the risk and the private sector scoopin' up the gains...and thats unacceptable to me, aye.

i prefer the A.I.G. model 'o bailout, whar the public takes the risks but also reaps the benefits 'o the risks taken - without the bankin' middlemen to gorge on thar share.

- MeadHallPirate

Government loan guarantees of automotive companies in trouble has precedence. The government coming in and dictating the terms of a bankruptcy, who wins (gets rewarded = UAW) and who loses (gets screwed = bond holders), had never happened before until GM and this administration.