Credit Crunch

The Rescue on Main Street

by kaighn (Chimp, 0 Banana Points Points) on 9/30/08 at 9:29pm

Frustration and anger are two feelings that come bubbling forth from my gut as I watch the drama unfold in regard to the rescue plan for our financial system being deliberated before my eyes. At the heart of the matter sit the two Government Sponsored Enterprises (GSE's) Fannie Mae and Freddie Mac. The utter disregard for the facts by the mainstream television and print media, Barney Frank and Christopher Dodd completely amazes me.

This has been the best week in my bank's 100+ yr history

by Kuka (Monkey, 59 Banana Points Points) on 9/19/08 at 7:51pm
This has been the best week in my bank's 100+ yr history

Edit- thought I'd better delete all the sensitive / confidential information. Let's just say this has been the best week ever for my bank given the enormous business we've gained from the demise of Lehman, Merrill and fears on MS/GS, and I'm very confident my bank can't possibly go under due to its safe model, low leverage and tiny exposure to toxic crap.

Ps- whoever puts these random pictures up is very funny!

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Stop bitching. AIG is not a bailout.

by captk Certified User (Senior Orangutan, 387 Banana Points Points) on 9/17/08 at 12:45am
Stop bitching. AIG is not a bailout.

Have you complainers even read the terms of the loan? (yes, loan)

Basically, the Fed agreed to loan AIG up to $85 billion at LIBOR + 850bps. (!) That's about 11% interest. And in exchange, AIG gave the Fed 80% of the company - for keeps. AIG common and preferred get nothing, bonds get pennies on the dollar.

AIG has about $1 trillion in assets. As I understand it, the Fed just received claim to about $800 billion of (albeit illiquid) assets in exchange for LOANING AIG $85 billion. Not to mention that because AIG remains a going concern, the stock will likely appreciate over time as we come out of this mess.

In summary, this is no bailout. No taxpayer money has gone out the door. The loan is secured by the assets of AIG, and the creditor (the Fed) now controls the company, and has authority to cancel any dividends and force asset sales to repay the loan. This is about as safe a loan as I can imagine. If anything, the Fed/Treasury will make a profit on this one.

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