Results 1 to 2 of 2

Thread: In AIG flap, it's not just about bonuses anymore

  1. #1
    Banned
    Join Date
    Feb 2006
    Location
    Tiamat's better half
    Last Seen
    10-28-11 @ 01:41 AM
    Gender
    Lean
    Conservative
    Posts
    15,998

    In AIG flap, it's not just about bonuses anymore

    "Look at where the money went: Goldman Sachs, Paulson's firm, foreign banks," Sen. Jim Webb (D-Va.) said Wednesday. "AIG gave more money to foreign banks than we gave in loans to the auto industry."

    "The real outrage over the AIG bailout isn't executive bonuses, it's that billions in taxpayer funds intended for AIG have been passed through to benefit foreign banks and Wall Street behemoths like Goldman Sachs," former House Speaker Newt Gingrich wrote in an e-mail letter to conservatives Wednesday morning.

    http://www.latimes.com/business/la-f...,2707699.story


    So the foreign bank thing....is that an issue or not? Was the money AIG gave to foreign banks money that AIG owed foreign banks? If it was I don't see how we can be irate over it.

    Quick someone explain; my brain is all fizzled out.

  2. #2
    I'm not-low all the time
    Kushinator's Avatar
    Join Date
    Jan 2006
    Location
    West Loop
    Last Seen
    Today @ 12:19 PM
    Gender
    Lean
    Independent
    Posts
    16,263

    Re: In AIG flap, it's not just about bonuses anymore

    Quote Originally Posted by talloulou View Post
    http://www.latimes.com/business/la-f...,2707699.story


    So the foreign bank thing....is that an issue or not? Was the money AIG gave to foreign banks money that AIG owed foreign banks? If it was I don't see how we can be irate over it.

    Quick someone explain; my brain is all fizzled out.
    Yes AIG was bailed out to guarantee the payment of credit default swaps (massive mortgage defaults).

    Insurance companies do not just take your payments, and put them in an account where they pay out claims. Instead they invest it to create more capital. Credit default swaps are used to minimize risk to lending, and what AIG did was a real no no (Don has made this point quite a bit last year); they purchased the securities they insured against.

    Not only were they hit with the massive payouts, but the assets their massive payouts were marked to were virtually "worthless" (pennies on the dollar).

    Yes they paid out large sums of insurance payments to foreign banks, and big wig banks on Wall Street with bail out money.
    It is not very unreasonable that the rich should contribute to the public expense, not only in proportion to their revenue, but something more than in that proportion.
    "Wealth of Nations," Book V, Chapter II, Part II, Article I, pg.911

Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts
  •