Gov Bailouts
09-17-2008, 03:11 PM
#21
Line Holder
Joined APC: Mar 2005
Position: Swivel Chair
Posts: 97
Quote
What I'm curious about is if the government is run by the people, if AIG makes money, how does that go back to the taxpayer?
ENDQUOTE
Cuz the FED will own 79.9% of the shares of AIG ... that's a pretty big voting block which could and should cause the board of directors to pay a large amount of profit in dividends. On the other hand, while AIG pays back the bridge loan at about 9% interest (I don't pay that much on anything) there's a profit for the FED and if AIG becomes profitable and well healed, the FED can sell it's majority shares.
It it works it's good. If it doesn't, is more good money poured down the hoss hole after bad.
TransMach
What I'm curious about is if the government is run by the people, if AIG makes money, how does that go back to the taxpayer?
ENDQUOTE
Cuz the FED will own 79.9% of the shares of AIG ... that's a pretty big voting block which could and should cause the board of directors to pay a large amount of profit in dividends. On the other hand, while AIG pays back the bridge loan at about 9% interest (I don't pay that much on anything) there's a profit for the FED and if AIG becomes profitable and well healed, the FED can sell it's majority shares.
It it works it's good. If it doesn't, is more good money poured down the hoss hole after bad.
TransMach
09-17-2008, 03:14 PM
#22
Gets Weekends Off
Joined APC: Apr 2006
Position: 737 CA
Posts: 2,750
That is funny Bill Clinton had more to do with what's going on with the Banking industry and mortgage banking, you need to check your facts.
Clinton signs banking overhaul measure
November 12, 1999
Web posted at: 3:28 p.m. EST (2028 GMT)
WASHINGTON (CNN) -- The biggest change in the nation's banking system since the Great Depression became law Friday, when President Bill Clinton signed a measure overhauling federal rules governing the way financial institutions operate.
"This legislation is truly historic and it indicates what can happen when Republicans and Democrats work together in a spirit of genuine cooperation," Clinton said at a White House signing ceremony. The event brought together the president and several Republican members of Congress who have been among Clinton's sternest critics -- a sign of the bipartisan support that eventually developed for the package.
Congress passed the bipartisan measure November 5, opening the way for a blossoming of financial "supermarkets" selling loans, investments and insurance. Proponents had pushed the legislation in Congress for two decades, and Wall Street and the banking and insurance industries had poured millions of dollars into lobbying for it in the past few years.
Clinton signs banking overhaul measure
November 12, 1999
Web posted at: 3:28 p.m. EST (2028 GMT)
WASHINGTON (CNN) -- The biggest change in the nation's banking system since the Great Depression became law Friday, when President Bill Clinton signed a measure overhauling federal rules governing the way financial institutions operate.
"This legislation is truly historic and it indicates what can happen when Republicans and Democrats work together in a spirit of genuine cooperation," Clinton said at a White House signing ceremony. The event brought together the president and several Republican members of Congress who have been among Clinton's sternest critics -- a sign of the bipartisan support that eventually developed for the package.
Congress passed the bipartisan measure November 5, opening the way for a blossoming of financial "supermarkets" selling loans, investments and insurance. Proponents had pushed the legislation in Congress for two decades, and Wall Street and the banking and insurance industries had poured millions of dollars into lobbying for it in the past few years.
ding, ding, ding...
You mean this bill? That was Banking Committee Chr. Phil Gramm's baby. He worked on it for years and was the chief sponsor. It passed the Senate 54-44 mostly among party lines. Guess what McCain's vote was? Clinton threatened a veto, but later signed the bill after certain compromises. Here is the story.
WASHINGTON - Sweeping legislation that would let banks, securities firms and insurance companies merge to create big financial "supermarkets" has pushed through the Senate.
The bill would lift Depression-era legal barriers separating the three industries, allowing the new companies to sell consumers everything from checking accounts to car insurance to mutual funds.
It includes a provision that would make it a federal crime for anyone to misrepresent himself to obtain someone's private financial data.
The mostly party-line vote yesterday was 54-44 on the bill, which faces a likely presidential veto if Congress sends it to President Clinton without changes. Sen Slade Gorton, R-Wash., and Sen Patty Murray, D-Wash., voted along party lines.
The Clinton administration supports the legislation in principle. But in a showdown with Senate Banking Committee Chairman Phil Gramm, R-Texas, it has threatened a presidential veto of the bill unless there are major changes, including the removal of provisions that Democrats view as an attack on a 1977 community-lending law that requires banks to make loans to poor and minority residents in the areas in which they operate.
Proponents of the financial overhaul legislation, led by Wall Street and the insurance industry, maintain it is needed to keep the U.S. financial industry competitive in global markets and it would save consumers millions by providing one-stop financial shopping. The financial industries have spent millions lobbying for the legislation in recent years.
A financial overhaul bill more to the administration's liking recently cleared the House Banking Committee and is being reviewed by the House Commerce Committee, which has given it a lukewarm reception.
Treasury Secretary Robert Rubin and the administration want to let banks get into new kinds of financial activities through subsidiaries of the banks themselves, not just through affiliated companies within the same parent holding company. That arrangement would increase the power of the Treasury's Office of the Comptroller of the Currency, regulator of nationally chartered banks.
Federal Reserve Chairman Alan Greenspan and most GOP lawmakers, on the other hand, want to let banks diversify through a holding company structure. That would expand the independent Federal Reserve's role as a regulator.
09-17-2008, 03:25 PM
#23
Line Holder
Joined APC: Jun 2008
Posts: 65
Quote
On the other hand, while AIG pays back the bridge loan at about 9% interest (I don't pay that much on anything) there's a profit for the FED and if AIG becomes profitable and well healed, the FED can sell it's majority shares.
It it works it's good. If it doesn't, is more good money poured down the hoss hole after bad.
TransMach
On the other hand, while AIG pays back the bridge loan at about 9% interest (I don't pay that much on anything) there's a profit for the FED and if AIG becomes profitable and well healed, the FED can sell it's majority shares.
It it works it's good. If it doesn't, is more good money poured down the hoss hole after bad.
TransMach
The AIG facility has a 24-month term. Interest will accrue on the outstanding balance at a rate of three-month Libor plus 850 basis points. AIG will be permitted to draw up to $85 billion under the facility.
I'm sure AIG will be doing everything they can to pay back this loan sooner rather than later.
09-17-2008, 03:39 PM
#24
Che Guevara
Joined APC: Aug 2005
Posts: 6,408
To be fair don't let the FED fool you into thinking they bailed AIG out. They just gave them 85billion as a loan where AIG is then required to sell 80% of its assets overtime. The AIG boost should have never happened. It would have been better to let them go BK. Look at what happened to LEH. Go BK and let others pick up the assets for fractions of what it would have costs. The Fed only hurt banking by giving AIG the loan and it hurt the reputation of the american banking system which is why we saw a 450 point drop today. Reputation is everything right now. A key reason the feds kept the interest rate at 2%. When they DIDN'T lower it the market jumped quite a bit because foreign money started flowing in. It meant inflation would be curbed and that the industry was more stable. This is all just thinning of the heard. AIG is not deposit based which is what pushed the great depression. They didn't have a reason to be helped by the fed. Read my signature. Socialism at its best.
09-17-2008, 03:43 PM
#25
Gets Weekends Off
Thread Starter
Joined APC: Dec 2007
Posts: 517
Hey guys thanks for the all the info and thanks for keeping the politics out of it.
09-17-2008, 03:48 PM
#26
Line Holder
Joined APC: Jun 2008
Posts: 65
AIG is not required to sell 80% of it's assets. They have to repay the loan plus interest within 2 years. They have $1,049,876,000,000 in total assets. That's with a T!
09-17-2008, 03:56 PM
#27
Gets Weekends Off
Joined APC: Feb 2008
Position: new guy
Posts: 382
The talk always sounds good. Laissez faire, less regulation, hands off business. Then all of a sudden, the largest mortgage broker is gone, the gov is bailing out Fannie Mae and Freddie Mac to the tune of 100B each if need be. And now 85B for AIG. I wonder if a little more regulation could have prevented this? Eight years of failed policy culminating in one big bill for the taxpayer. Fiscally responsible my arse.
Do not try to tell me that more regulation is the answer. Almost every industry in this country with heavy regulation runs inefficiently and has to be bailed out with taxpayer money consistently. But, I guess you like how Medicare and Social Security are being run...
09-17-2008, 03:58 PM
#28
Gets Weekends Off
Joined APC: Feb 2008
Position: new guy
Posts: 382
You just make yourself look ignorant with this diatribe. Fannie and Freddie were run by top Democrats for the longest time. I do not think that there were not Republicans that could have done more to try to fix the messed up system, but whey don't you see who actually benefited financially the most... The party starts with a D, not an R.
09-17-2008, 04:01 PM
#29
Moderator
Joined APC: Dec 2007
Position: DAL 330
Posts: 6,992
The talk always sounds good. Laissez faire, less regulation, hands off business. Then all of a sudden, the largest mortgage broker is gone, the gov is bailing out Fannie Mae and Freddie Mac to the tune of 100B each if need be. And now 85B for AIG. I wonder if a little more regulation could have prevented this? Eight years of failed policy culminating in one big bill for the taxpayer. Fiscally responsible my arse.
This just started 8 years ago. This crap has been going on since the late 70's with both parties running the show.
Scoop
09-17-2008, 04:03 PM
#30
Gets Weekends Off
Joined APC: Apr 2006
Position: 737 CA
Posts: 2,750
It's funny how your own arguement makes the point for the opposition. The reason that companies like Fannie and Freddie failed is the EXACT reason you espouse to be the downfall. Government regulation was the cause for their failing. The were backed by the federal government with no fear of failure despite the bad loans they wrote. If the companies were left alone in a pure market, they would not have made most of the failing loans that were made because they would have actually had fear of failure. They knew they had no fear of failure because "the gov't could not let us fail."
Do not try to tell me that more regulation is the answer. Almost every industry in this country with heavy regulation runs inefficiently and has to be bailed out with taxpayer money consistently. But, I guess you like how Medicare and Social Security are being run...
Do not try to tell me that more regulation is the answer. Almost every industry in this country with heavy regulation runs inefficiently and has to be bailed out with taxpayer money consistently. But, I guess you like how Medicare and Social Security are being run...
