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Thread: AIG: Thank You America, But We May Sue You

  1. #31
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    Re: AIG: Thank You America, But We May Sue You

    Quote Originally Posted by PirateMk1 View Post
    1) It asserts that there exists in our country businesses that are too large either physically or fiscally or both to be allowed to fail because of percieved negative effects on the national or state economy. Thats the nutshell version.
    There-in is part of the problem, that nutshell is missing a very important part. It is better put that they are too large and critically interconnected within the economy to fail and be dismantled safely with the current legal system to do so.

    We (the royal we ) have already faced “too big to fail” at wide scale, a prime example being back in the late 1920’s and early 1930’s. The response, after the initial laissez-faire (with a very poor outcome), was in part to institute the FDIC for banks. There was already bankruptcy laws on the books but they proved insufficient for the banking industry, as the economy had evolved and progressed in using them. The problem had to do with both speed at which the bankruptcy was executed (so assets could be divided and dispersed) and the level of insolvency that the banks could reach (thus shortage of assets to pass out to creditors), coupled with their tight ties though out the economy. It was not a matter of ensuring a bank would never fail, it was a matter of having a better chainsaw (and authority to use the chainsaw) to chop it up and move on quickly coupled with triggers and boundaries to keep the job at a size that the chainsaw could handle.

    And it worked [well], and continues to work, for 80+ years for the institutions that it was targeted at.

    What has happened is that AIG, and others such as Citibank, blurred the lines with the banking industry (and partially due to particular dismantling of key aforementioned boundaries were allowed to blur the lines) and also became similarly key, widely interconnected components of the economy. But we did not build the chainsaw for them, as they exist. Citibank is only partially a bank. AIG never was a bank (although there were insurer rules that they sort of colored outside the lines on). Why AIG was/is so critical has to do with the role of insurance in our economy, and the level of marketshare that AIG had. If those policies, Trillions of dollars worth, fall our economy grinds to a halt. Maybe you do not understand this but it is the case, and I will save time by not going into it.

    So now we need a bigger chainsaw (and accompanying rules of operation to keep the chainsaw relevant, maybe requiring some partial dismantling of existing problem children). Thus we can within a few days shutdown, chop up, and move on from say Citibank or AIG failing in the same way that we do 100’s of times a year with banks like Joe Sawbuck’s First National Bank of Duluth.

    Presto, no more “too big to fail” without removing the [critical] scenario of failing.
    Last edited by Dwight; 01-08-13 at 03:07 PM.

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    Re: AIG: Thank You America, But We May Sue You

    If I were the gov I would counter sue AIG for wasting tax payer money.
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    Re: AIG: Thank You America, But We May Sue You

    Quote Originally Posted by Dwight View Post
    There-in is part of the problem, that nutshell is missing a very important part. It is better put that they are too large and critically interconnected within the economy to fail and be dismantled safely with the current legal system to do so.

    We (the royal we ) have already faced “too big to fail” at wide scale, a prime example being back in the late 1920’s and early 1930’s. The response, after the initial laissez-faire (with a very poor outcome), was in part to institute the FDIC for banks. There was already bankruptcy laws on the books but they proved insufficient for the banking industry, as the economy had evolved and progressed in using them. The problem had to do with both speed at which the bankruptcy was executed (so assets could be divided and dispersed) and the level of insolvency that the banks could reach (thus shortage of assets to pass out to creditors), coupled with their tight ties though out the economy. It was not a matter of ensuring a bank would never fail, it was a matter of having a better chainsaw (and authority to use the chainsaw) to chop it up and move on quickly coupled with triggers and boundaries to keep the job at a size that the chainsaw could handle.

    And it worked [well], and continues to work, for 80+ years for the institutions that it was targeted at.

    What has happened is that AIG, and others such as Citibank, blurred the lines with the banking industry (and partially due to particular dismantling of key aforementioned boundaries were allowed to blur the lines) and also became similarly key, widely interconnected components of the economy. But we did not build the chainsaw for them, as they exist. Citibank is only partially a bank. AIG never was a bank (although there were insurer rules that they sort of colored outside the lines on). Why AIG was/is so critical has to do with the role of insurance in our economy, and the level of marketshare that AIG had. If those policies, Trillions of dollars worth, fall our economy grinds to a halt. Maybe you do not understand this but it is the case, and I will save time by not going into it.

    So now we need a bigger chainsaw (and accompanying rules of operation to keep the chainsaw relevant, maybe requiring some partial dismantling of existing problem children). Thus we can within a few days shutdown, chop up, and move on from say Citibank or AIG failing in the same way that we do 100’s of times a year with banks like Joe Sawbuck’s First National Bank of Duluth.

    Presto, no more “too big to fail” without removing the [critical] scenario of failing.
    I am quite conversant in business and investing matters.

    Chainsaw? Please clairifie what rules are needed besides the standard bankruptcy rules.

    First AIG. AIG is a very large insurer in this country if not the largest. But they are by no means the only insurer. Any policies bonds ect they had in place would have most likely been replaced by another insurer abet at a higher premium most probably. Any investments had by anyone with AIG most likely would only net a partial return of their intial outlay. Note this is only if the company was liquidated. Otherwise the debts AIG had would have been restructured. I fail to see how AIG's bankruptzy would have severerly effected the national economy for any length of time. It would primarirly be an inconvience to those with bonds and insurance policies having to scramble to get new ones. Again that would only have been if they were liquidated.

    Citibank could have been handled like it was a bank or regular bankruptcy. In either case a bailout was unnesserary.

    Too big to fail is and was a foolish notion. Bailouts should NEVER be an option by the government.
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    Re: AIG: Thank You America, But We May Sue You

    Quote Originally Posted by PirateMk1 View Post
    I am quite conversant in business and investing matters.

    Chainsaw? Please clairifie what rules are needed besides the standard bankruptcy rules.
    Can I ask, given your vast coversancy in business and investing matters, what do you think the difference is between a bank in the US going bankrupt and, say, Borders Group, Inc. going bankrupt?

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    Re: AIG: Thank You America, But We May Sue You

    Quote Originally Posted by Dwight View Post
    Can I ask, given your vast coversancy in business and investing matters, what do you think the difference is between a bank in the US going bankrupt and, say, Borders Group, Inc. going bankrupt?
    Primarilly the depositors into the bank. They may lose a portion or all of their deposite. Satified?
    Semper Fidelis, Semper Liber.
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    Stolen fair and square from the Capt. Courtesey himself.

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    Re: AIG: Thank You America, But We May Sue You

    Quote Originally Posted by PirateMk1 View Post
    Primarilly the depositors into the bank. They may lose a portion or all of their deposite. Satified?
    Well I am satisfied you really do not understand the difference with how FDIC covered institutions are handled from run-of-the-mill corporations.

    To answer: “Chainsaw? Please clairifie what rules are needed besides the standard bankruptcy rules.” I would normally say, “Roughly speaking, similar powers that the FDIC has to deal with banks.” But that, it appears, would be lost on you. You do not understand how quickly banks get processed, both in terms of point at which insolvency is determined [by an outside party] and from there how quickly the assets are moved and accounts settled. But here, I will give stepping back to that point a try;

    To be a bank you agree to certain rules that are extra-ordinary compared to regular corporations. Asset and operation seizures that simply would not be tolerated by a court normally are routine with banks. Although this does not preclude suits, there is much wider range given for things like the AIA sale named in this suit, and even less likely for a judge to issue an order blocking the action from being taken rather than just letting it happen and sort it out afterward. The turn around can be hours or maybe a few days. It is lightning fast, rather than the months (or years) of sitting is financial limbo that normal corps can.

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    Re: AIG: Thank You America, But We May Sue You

    One things for sure Elizabeth Warren is going to have an hay day!


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    Re: AIG: Thank You America, But We May Sue You

    Quote Originally Posted by grip View Post
    If I were the gov I would counter sue AIG for wasting tax payer money.
    The government is in breach of the fifth amendment pretty blatantly here. Just like they breached the fifth amendment by taking up shares of GM when they bailed them out.

    They didn't waste the money either considering the taxpayers came out ahead.

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    Re: AIG: Thank You America, But We May Sue You

    Quote Originally Posted by justabubba View Post
    AIG: Thank You America, But We May Sue You - Forbes
    un****ingbelievable
    AIG would be nothing but a memory had the government not (wrongly) chosen to shore it up so that it could pay out the extensive claims due during the meltdown
    but now it is contemplating joining in a lawsuit filed by its former CEO (the one responsible for its financial quagmire) against the USA
    and here is the basis:
    the bailout provided funds so it could pay out is obligations 100 cents on the dollar (when it was over extended by Trillions)
    and
    AIG was forced to sell some of its prized assets

    how dare we make a loan to a company and also condition that loan such that AIG was required to sell something of its own to be able to afford to pay its just obligations!

    if AIG enjoins this suit against our nation, it will exhibit more gall than even charles degaulle
    Imma walk waaaaaaaaaaaaaaaay out on a limb here and say that maybe AIG is blowing smoke as a defensive tactic because some of the major rat bastards involved will be indicted in the not too distant future. The climate may be getting riper to finally charge those treasonous, greedy, sumbitches and other banksters and Wall Street slime for the crimes they committed against the nation, and charge them well. For those and other reasons I am thinking this may be a defensive maneuver.

    There are some time tested verities. One is that "Payback is a mother****er".










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    Re: AIG: Thank You America, But We May Sue You

    Quote Originally Posted by Henrin View Post
    The government is in breach of the fifth amendment pretty blatantly here. Just like they breached the fifth amendment by taking up shares of GM when they bailed them out.

    They didn't waste the money either considering the taxpayers came out ahead.
    If AIG sues the gov they'll be wasting our money in court, not even considering a settlement.
    Einstein, "science without religion is lame, religion without science is blind."

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