DISQUS

Butch1 · 1 year ago

Yes, they should and take Phil Gramm with them. He should never advise anyone again, He brought this on with his mindless deregulation practices.

Older_Wiser · 1 year ago

Not unless AIG executives are tried for fraud.

And don't give them anymore of the taxpayers' money--cut them off, as it's evident that they're just blowing it on trips, expensive fun, etc. If they can spend irresponsibly, the US govt doesn't have to live up to its end of the "bargain" and what it promised as a "loan" which obviously it will never get back.

And some people want to blame the poor suckers who fell for the mortgage scams they were offered by the crooks who then sold the mortgages to other crooks who AIG guaranteed on those credit default swaps...

The apple is rotten, folks. Throw it away.

Bostonian_Queer_in_Dallas · 1 year ago

Once upon a time in America there were small town banks who knew their customers. Once the Reagan revolution destroyed government oversight, and set in deregulation, these small banks were swallowed up and led us to where we are today. When was the last time you actually KNEW a teller by name and went to a window to make a transaction? I am with a very tiny credit union in Dallas, originally set up for Sears employees, and it is small enough to actually sit down and talk to the bank manager. It's a tiny company and yet I can do all the flashy online shit that Bank of America offers, and with cheaper loan rates.

My god we are fucked.

gotoL · 1 year ago

The bankruptcy laws allow the Trustee to recover money paid 90 days prior to the bankruptcy filing. Therefore, since it appears that much of this money was mis-spent, then, for the good of the creditors (and the taxpayers) the filing should come NOW. The remaining creditors can file an involuntary bankruptcy.

From A.I.G.'s point of view, they will wait out the 90 days before filing bankruptcy so that the trustee can't recover mis-spent funds.

paul94611 · 1 year ago

The only reason AIG has gotten the assistance they have thus far is to save the credit default swap market from imploding. An AIG bankruptcy as one of 17 major counter-parties in this 56 trillion dollar, unregulated market would cause a complete deflation of positions.
Political leaders are concerned that this deflation would cause worldwide financial disruption. What we have come to learn is that now the dominoes have started to fall; Lehman, Washington Mutual, the Icelandic banks and soon many Eastern European banks there is nothing we can do to keep this market inflated.
The good subsidiaries must be separated from the part of the firm that wrote these swaps. These "good firms" are responsible for a significant portion of the property, causality, commercial, auto and commercial insurance products currently held in the US as well as numerous pension program funding and annuity products. These aspects of AIG's businesses must be segregated and safeguarded from the idiocy of their credit default swap businesses.
The swap business must be allowed to fail and a fully regulated market with a transparent clearing facility taking its place.
Many legal and accounting experts are concerned that such an implosion would cause an incredible amount of litigation as firms attempted to recoup funds already paid in an opaque, unregulated, over the counter marketplace. I say allow those trades that have a clear bond holder with a funded counter-party to transfer their position to the new facility. For the rest, remind them that they willingly participated in an unregulated market and they need to deal with it, but their claims have no standing in the United States.
If there is one truism in a recession it is that firms that are failing need to be able to fail. We will never be free of the "to big to fail" con game as long as these mega firms are allowed to continue to merge becoming even larger and more important to the economy while keeping us on the hook through the manipulation of our elected representatives for what could well be losses in excess of 5 trillion dollars in the next two or three years. It is time to enforce a controlled transition and liquidation of this marketplace and demand that those who willingly place their firms at risk in an unregulated market take their losses on their own hook.

cereal · 1 year ago

The subsidiary responsible for the credit default swap business also does a number of other types of business - including interest rate swaps, structured transactions, energy and precious metals trading, FX trading, guaranteed investment contracts (largely supporting massive municipal investments in things like rail cars, energy generating facilities, waste water treatment plants, and so on). CD swaps are only one component of this company's business and the only one that has caused big losses. They also do a big wrap business which, for example, helps support retirement funds by spreading risk. Good time to explode that whole business for everyone, right?

Cut off this company and allow it to fail, and you not only punish people who had nothing to do with the credit defaults at all, but you tank a huge number of complex transactions in real assets that actually benefit lots of people. Not to mention, as you point out, screwing up everything for other market participants - but not just with CD's, but everything from gold to electrical capacity to foreign exchange and on and on and on.

Yes, it would be a good idea to make the CD market (and maybe other things, like FX options, etc) regulated. but you can't avoid the fact that even focusing only on one company (in this case AIG Financial Products) and blowing it up out of spite or some misguided sense of vengeance, still won't solve anything.

paul94611 · 1 year ago

There is a reason why I advocate seperating the good business from the bad to safeguard the good businesses....

cereal · 1 year ago

so in your world, AIG (and every other financial firm on the planet) would have had like twenty separate subsidiaries? One doing only FX options and forwards, one doing only interest rate swaps, one doing only GIC's, one doing only precious metals, one doing only base metals, one doing only municipal bonds, and on and on? Would you also have the brokerage houses split their businesses so one does only large cap manufacturing sector stocks, one does only treasuries, one does only commodities, etc.?

please don't tell me you are the one genius who, ahead of time, knew exactly which line of business would suddenly become horribly bad. So that you would have separated out the Cd business into its own company - but left all the other ones together.

If you had known that, don't you think some of the other people, who spend their entire day, every day, thinking about huge market discontinuities, disaster scenarios, and business-killing risk, might have figured it out too? Because I can guarantee you, there were people at AIGFP, and the parent, worrying about exactly that, and what effect a big downturn in EVERY line of business could have on the firm as a whole.

brian · 1 year ago

That money that they wasted could have been used for social services, like health care for everyone. Or will the government bail me out when I need it? I doubt it.

ComradeRutherford · 1 year ago

John McCain (and Obama) just want to 'spread the wealth around - from your hard-earned wages, directly to the obscenely wealthy.

The CEO's cigars won't light themselves, you know. It takes a hundred dollar bill directly from your taxes to get their cigars to light up...

Imagine spending 14 months worth of Iraq War (Another welfare scheme to 'spread the wealth around $10B/month - but this time it's your kid's wealth they are handing to the war profiteers) in just two months! Wow! And YOU are handing you your own money so they can live in extreme luxury!

But that's OK with Conservatives. Re-distribution of wealth is a cornerstone of Republican Capitalism - from the poor and middle class to the already-wealthy. Conservatism is a euphamism for class warfare, where the incredibly rich make war on middle class and poor Americans. Conservatives steal your money and lie about doing it...

cowboyneok · 1 year ago

I agree that Republicans believe in redistributing the wealth from the poor / middle class to the wealthy. They also do not want to pay for government services but, by G-d, there better be SERVICES FOR THEM!

ComradeRutherford · 1 year ago

John McCain gets free universal health care provided 100% by federal government bureaucrats.

Why can't we have that, too, since it works so well that the President and Congress are well cared for?

cowboyneok · 1 year ago

One of the FIRST THINGS that needs to be done when and if Obama is "allowed" to win. BANKRUPTCY LAW OVERHAUL. Yes, Republicans made a JOKE of our Bankruptcy laws and their needs to be a top down overhaul of the Bankruptcy Laws. Republicans were able to make a mockery of Bankruptcy by punishing the little guy who has to file while rewarding the rich who find themselves in financial trouble. Bankruptcy Laws need to be made where the poor are protected from over exposure to debt they can no longer pay and the rich should not be allowed all their exemptions where they end up not having to be responsible for debt but get to keep all their goodies. Those "goodies" eventually wind up in Republican political coffers, of course.

Savage8862 · 1 year ago

Yes they need to file bankruptcy. Free markets dictate that they sink or swim on their own. Then I agree with Cowboyneok - althugh I am not sure what he means by saying if Obama is "allowed" to win - that bankruptcy laws are changed to help the middle class and lower class that find themselves hit by unemployment, high medical bills, or some other disaster. With that said, one who makes stupid financial mistakes because they believe that bankruptcy can be used just to start over should not be allowed to file for full bankruptcy but for a reorganization.

ckerst · 1 year ago

What kind of an idiot invests 143 thousand ina company with out a careful look at their finacials let alone 143 billion? Answer: George Bush.

cereal · 1 year ago

I'd be the last to defend Bush, but actually, if you looked at the financials, everything would have looked fine. The problem is in the accounting rules and standards. Firms (especially financial firms, where it's all more or less imaginary "value" since there are generally no tangible assets to count up) can make themselves look great on paper when, if one problem pops up, they suddenly "have no money." You don't even have to go all Enron sleazy to make financials look good. Of course, the same people who preach "free markets cure everything" are the ones fighting for the loosest most "creative" accounting and reporting rules. They know, in theory, that markets only work perfectly if you have perfect information...but at the same time, their self-interest forces them to fight for the ability to fool people into investing in their firms. A real reform of our financial system would include very strict and uniform financial reporting and accounting standards and strict oversight of auditors etc., - way more than the stuff these CEO's bitch about endlessly with Sarbanes-Oxley already.

GrMtGirl3 · 1 year ago

YES . . . . YES . . . YES !

Mickey7 · 1 year ago

Remember when Paulson admitted that they had no idea what sort of CDO (credit default swap) debt AIG was actually holding because it was unregulated and companies were not required to disclose that? WTF? Not required to disclose? Then the American people should not have been 'required' to give them a handout. The government bought into AIG without knowing the full extent of their liability? It is truly mind-boggling and we've been happily throwing good money after bad to these losers. It is beyond obscene.

I get why people tend to express a sincere belief in the power of the free market to right itself--we've been indoctrinated to idolize it from birth. But it's important to remember that without responsible regulation the market is not free--it becomes the plaything of the manipulative and the criminally minded. If we really want a free market, we have to be sure the playing field is kept as free of market manipulation as possible. Otherwise, as we've seen lately, the invisible hand will just keep giving us the finger.

cereal · 1 year ago

although the CDO market is unregulated, in theory AIG's exposure (or AIG-FP's exposure, which AIG guaranteed) would have been reported in its financials. Both are public companies, I think, so the reporting obligation is there, even if they don't have to slice it up and underline each separate bit of it for you.

But that's not the problem - the problem is that even if they HAD reported what exposure they THOUGHT they had, that calculation or estimate turned out to be wrong. That's the entire problem with the credit default swaps and all the other derivatives linked to the mortgage mess- a lot of very smart people had very complicated models that they THOUGHT showed them what values, risks, and exposure they had. It just all turned out to be bullshit. it's not like they KNEW it was valueless, or KNEW what exposure they "really" had and lied about it - they STILL don't know. That's the reason it's such a big problem and people don't want to lend to each other. if they knew the real values and losses, everyone could pick up and move on. They don't.

TXfemmom · 1 year ago

They should have permitted AIG to fail, and just cleaned up the mess. A good many of the top executives, board members, and others need to go to JAIL. I have an annuity with AIG, placed there against my wishes by an ex-employer and dealing with the people over time has convinced me that they are all a bunch of goons and crooks.

The government should just take total control now, and clean up the mess as well as it can be cleaned up and track down all the exhorbitant compensaton and bonuses and seize them under the RICO act.

TXfemmom · 1 year ago

What Cowboy means is that the bankruptcy laws need to be changed back to what they were before the last changes. They were tough, but they did permit someone to get back on their feet. We have some friends who went through a terrible time where despite having what was considered to be very good health insurance, they found themselves with over $50,000 in credit card debt to meet expenses not covered by their health insurance, and combined with the inability of the one who was ill being off work for nearly two years, they had to declare bankruptcy.

Since they had put those expenses on credit cards, they are still severely hamstrung, as the credit card debt has to be paid off under the last changes. They don't know if they will ever be financially stable again.

jpage · 1 year ago

I’m Jessica Page, co-producer of The Walden University Presidential Youth Debate, which features over 40 minutes of exclusive candidate video answers to previously unanswered questions. We're working really hard to inspire informed voting throughout America and in doing so we created this debate.

The candidates have a lot to say about the bail out and the economy in general. See where they stand int he video below and check us out at http://debate.waldenu.edu/

http://www.youtube.com/watch?v=pN1rZcc8QfM

vkobaya · 1 year ago

The other purpose of Bush's purge of the Department of Justice was to be certain that the criminals and thieves on Wall Street go unprosecuted. If our criminal justice system really were honorable, ethical and just (to say nothing of willing to work hard), the list of prosecutions of Wall Street would clog the courts for years and years. As of yet, have any of these monkeys been prosecuted? Has the Bush administration been prosecuted yet for their massive civil, financial and war crimes against this country to say nothing of against the world?