Median Democrat (1000+ posts) Tue Mar-17-09 10:28 PM
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Flashback - September 2008 - Bush/Paulson Announce $85 Billion Rescue Of AIG - No Regulations!
The one problem about bonus-gate is that it obscures the fact that the whole AIG fiasco is the culmination of years of hands-off regulation by the Bush administration. The bonus contracts were handed out during the Bush administration. The ponzi scheme that formed the AIG business model was formed during the Bush presidency. The AIG collapse took place under the Bush administration. Yet, these cogent facts are ignored as the media focuses on the bonuses, which constitute less than two percent of the total bailout, and tries to pin this on the Obama administration. Hey, are we forgetting how AIG went bust in the first place? It was due to deregulation, which is continually championed by Republicans even now. Worse, the Bush administration knew about AIG's troubles long before it finally bailed them out in September 2008, but did nothing.
Yet, the media focuses on the bonuses AND their are calls for Tim Geithner to resign? WTF about Paulson and Bernanke who slept walk through the events the lead to the crisis. Where were the calls for resignation by the corporate media back then? Again, the media shows the double standard being applied to Democratic administrations.
More....
http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=132x8268445Example....The NYT then,
09/17/08
WASHINGTON — Fearing a financial crisis worldwide, the Federal Reserve reversed course on Tuesday and agreed to an $85 billion bailout that would give the government control of the troubled insurance giant American International Group.
The decision, only two weeks after the Treasury took over the federally chartered mortgage finance companies Fannie Mae and Freddie Mac, is the most radical intervention in private business in the central bank’s history.
With time running out after A.I.G. failed to get a bank loan to avoid bankruptcy, Treasury Secretary Henry M. Paulson Jr. and the Fed chairman, Ben S. Bernanke, convened a meeting with House and Senate leaders on Capitol Hill about 6:30 p.m. Tuesday to explain the rescue plan. They emerged just after 7:30 p.m. with Mr. Paulson and Mr. Bernanke looking grim, but with top lawmakers initially expressing support for the plan. But the bailout is likely to prove controversial, because it effectively puts taxpayer money at risk while protecting bad investments made by A.I.G. and other institutions it does business with.
What frightened Fed and Treasury officials was not simply the prospect of another giant corporate bankruptcy, but A.I.G.’s role as an enormous provider of esoteric financial insurance contracts to investors who bought complex debt securities. They effectively required A.I.G. to cover losses suffered by the buyers in the event the securities defaulted. It meant A.I.G. was potentially on the hook for billions of dollars’ worth of risky securities that were once considered safe.
If A.I.G. had collapsed — and been unable to pay all of its insurance claims — institutional investors around the world would have been instantly forced to reappraise the value of those securities, and that in turn would have reduced their own capital and the value of their own debt. Small investors, including anyone who owned money market funds with A.I.G. securities, could have been hurt, too. And some insurance policy holders were worried, even though they have some protections.
http://www.nytimes.com/2008/09/17/business/17insure.html?_r=1
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