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Perhaps there's a more benign explanation for the AIG bailout. It was quicker and more efficient to give the money to AIG and let them pay their failing counte
by OliverJones 11y ago
Perhaps there's a more benign explanation for the AIG bailout. It was quicker and more efficient to give the money to AIG and let them pay their failing counterparties (all those crooked investment banks holding the credit default swaps) than it was to negotiate a bailout for each counterparty separately.
The paperwork for a first round startup financing is so complex and expensive a lot of investors can't afford a deal below a few megabucks. Can you imagine the paperwork to bail out an investment bank, multiplied by dozens and dozens, that had to get done in a few days.
Once the govt and the fed had decided to intervene, they needed to get it done. This got it done.
I'm afraid this is a case where justice for a few hundred bad actors took a back seat to righteousness for the whole economy.
- JackFr 11y agoYou say 'justice for a few hundred bad actors.' What precisely do you mean by that? Who were these actors and what did they do?
- marcusgarvey 11y agoFraud and gross negligence. There's evidence that banks and other players knowingly or negligently failed to do proper due diligence on the mortgages that they packaged into bonds and sold off to investors, the subsequent deterioration of which started the chain of events. http://www.economist.com/blogs/democracyinamerica/2010/10/financial_crisis_0 http://www.economist.com/blogs/democracyinamerica/2010/10/fi...
- whatok 11y agoStill no good reason for counterparties not even taking a minor haircut on CDS.
- sswaner 11y agoThis is the explanation we were given as employees: That the federal government helped us meet our contractual obligations to our policy holders. And, that we would have to work very hard to pay back the taxpayers.