AIG: More giveaways to financial services via NY Fed
Here’s another $25 billion giveaway to AIG. Notice that AIG gets the upside over $25 billion. Does this ever stop? Bloomberg reports.
American International Group Inc., the insurer bailed out by the U.S. government, agreed to hand over stakes in two overseas units to the Federal Reserve Bank of New York to reduce its central-bank debt by $25 billion.
AIG will place its largest non-U.S. life insurance businesses — American International Assurance Co. and American Life Insurance Co. — into special-purpose vehicles to eventually sell shares to the public, the New York-based insurer said today in a statement. The transactions, first disclosed in March amid the company’s third revised rescue, will close in the second half of the year, AIG said…
The New York Fed will get $16 billion of preferred shares in AIA and $9 billion in Alico, AIG said. The insurer will hold common shares in the units and benefit from any value beyond the $25 billion promised to the Fed after share sales.
I am sure the units are worth $25 billion and I am also sure the Federal Government needs to be in the insurance business overseas.
Do we taxpayers get an appraisal for our investment, or do we just take AIG’s and the NY Fed’s word for it?
Edward, you had me ready to celebrate Bernanke’s dismissal over the BofA/ML deal until you floated the idea of Larry Summers replacing Bernanke. I’d rather have the Finance Minister of Zimbabwe at the head of the Fed than an uber-rentier like Summers.
I pray that Obama will wake up and fire Geithner and Summers some fine day in the very near future. He needs to have a nice leisurely lunch with people like Marshall Auerback, Michael Hudson, Paul Volker, and Edward Harrison on a day when Summers takes a day off from raping the middle class and is out of the office. Judging by his work for D.E. Shaw, Fat Larry doesn’t work too hard, so that shouldn’t be hard to arrange. Then the hard work of re-drawing the social contract in this country might begin in earnest. Until then, it’s status quo as far as the eye can see, with a long, slow decline in our standard of living.
Right on, OregonGuy. If you haven’t been over to NewDeal2.0 to hear what Auberback, Volcker and others (like economists Robert Johnson and Arjun Jayadev) are saying, please come over and join the conversation.