AIG Said To Receive Access to More Cash
Insurer Expected to Report Record Loss
By Brady Dennis
Washington Post Staff Writer
Monday, March 2, 2009; A01
American International Group will gain access to $30 billion more in taxpayer money as part of another restructuring of its federal bailout, sources involved in the negotiations said yesterday. It marks the fourth time the government has stepped in to help the ailing insurance giant since September.
The reworked plan is aimed in part at helping AIG avert a potential disaster as it announces the biggest quarterly corporate loss in history this morning — more than $60 billion for the fourth quarter of 2008, according to sources who spoke on condition of anonymity because the results had not yet been released. The government reaction is rooted in the idea that a collapse of AIG, which has ties to nearly every major financial institution in the world, would endanger the entire economy.
Credit-rating agencies would have likely downgraded AIG in the face of such staggering losses, sources said, burying the company in a wave of new debt and possibly sending it into bankruptcy protection.
. . . “It buys time,” said one source involved in the discussions, who added that credit-rating agencies were consulted on the deal.
AIG will no doubt fall. All we are doing is cushioning the impact with a feather-bed of taxpayer dough. AIG’s wreckage is based on the wild-west sales of credit-default swaps, those profitable turds in the punch-bowl of economic growth.
Now, they are everywhere, an estimated $60 trillion in potentially fatal defaults–spread by AIG like a Typhoid Mary of the insurance industry.
I doubt even Ben Bernanke can fathom the enormity of a Black Death out there in the amount of $60 trillion (which starts with a T and rhymes with Me and puts us out to Sea). Where is the Music-Man when we so desperately need music?
No matter. We are buying time. But time, we are told, stands still for no man and one can only assume it keeps galloping along for dicey insurance agencies as well.