Word: aig
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...AIG could have cut a deal and perhaps saved taxpayers billions of dollars...
According to a report produced by a division of bond manager BlackRock in November 2008, AIG would probably have been able to strike settlements that, at least at the time, could have saved the giant troubled insurer, and taxpayers, billions of dollars. Instead, after a few days of harried discussions, the Federal Reserve Bank of New York - which was orchestrating the government's bailout of AIG - instructed the insurer to pay its counterparties, which included Goldman Sachs and a number of European banks, in full. The BlackRock report is one of many documents recently unearthed by a congressional investigation into...
...certain that any of the banks would, at the end of the day, have gone along with any offers from BlackRock, an adviser to the Fed. Nor is it clear whether any deals would have been more profitable for AIG, given the rebound in the credit markets. But what is clear is that the troubled insurer had more room to bargain than it and its government rescuers have let on. AIG and BlackRock declined to comment both on the bond manager's report and AIG's bond-insurance dealings. (See the best business deals...
...create the housing bubble; it's amusing to see longtime Greenspan fanboys like John McCain trashing Bernanke for insufficient foresight. And while the Fed should have provided stronger oversight, Bernanke is a much more aggressive regulator than Greenspan ever was; in any case, the Fed was never responsible for AIG, Bear Stearns, Lehman Brothers or most of the other firms that blew up the financial system...
...blew it during the crisis. This is nutty. It's easy to nitpick the AIG bailout or any of the Fed's other unpalatable decisions during the panic, but they have worked out better than anyone had any right to expect, preventing a catastrophe for a relatively paltry price. Bernanke has been pilloried for conjuring up trillions of dollars out of thin air and lending to unconventional borrowers who had never dreamed of getting their hands on Fed cash, but more than 80% of his emergency loans have been paid back, and the Fed is returning record profits to taxpayers...