Biden: Feds Should Not Bail Out AIG

Both Sen. Barack Obama and John McCain are opposing the bailout of AIG. Joe Biden on Good Morning America placed the blame squarely on Bush's failed policies which John McCain wants to continue:

No, I don't think they should be bailed out by the federal government. I'll tell you what we should do. We should try to correct the problems that caused this. And what's caused this? The profligate tax cuts to the very, very wealthy that John wants to continue.

What's caused this is the failure to have regulation so that, in fact -- John talks about these CEOs getting these big bailout packages. Well, why didn't he support the legislation we have been proposing that says that if you're going to declare bankruptcy, you've got to throw the CEO in the mix as well as everybody else? Why didn't he support the proposals that we have to allow in bankruptcy a federal bankruptcy judge to renegotiate the principal of your mortgage? Why didn't he do something to help the middle-class people who are hurting very badly? Is their government and it's this government's policies that have caused them to get in great trouble.

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    Well (5.00 / 2) (#1)
    by Steve M on Wed Sep 17, 2008 at 12:32:24 PM EST
    Opposing the bailout is sort of the populist part, while urging reforms to stop it from happening again is the sensible policy part.

    I'll stay away from the merits of the bailout since I have a conflict of interest and I'm not sure I have a clue anyway, but it seems to me that there's a wee bit of demagoguery in the air amidst all the solid policy prescriptions.  But hey, it's 7 weeks till the election, what do you want.

    if the US Government (5.00 / 3) (#8)
    by TimNCGuy on Wed Sep 17, 2008 at 12:40:03 PM EST
    now owns 80% of AIG and AIG sells insurance, can the government get a comapny discount through AIG and supply Universal Health Insurance to the citizens?

    Nah, let's keep it simple (5.00 / 1) (#40)
    by lambert on Wed Sep 17, 2008 at 01:06:21 PM EST
    Nationalize the health insurance companies!

    Maybe the taxpayers could be on the hook for something that's not toxic, just this one time?


    why the insurance (none / 0) (#75)
    by TimNCGuy on Wed Sep 17, 2008 at 02:24:12 PM EST
    just nationalize the doctors and hospitals...

    Following the Canadian model (none / 0) (#90)
    by lambert on Wed Sep 17, 2008 at 05:32:02 PM EST
    we don't have to do that, though following the UK model, I suppose we could.

    The key point is single payer, regardless of how we reach that point.


    A taxpayer discount (none / 0) (#12)
    by Militarytracy on Wed Sep 17, 2008 at 12:42:41 PM EST
    since we all own AIG?

    AIG... (none / 0) (#56)
    by MileHi Hawkeye on Wed Sep 17, 2008 at 01:26:30 PM EST
    ...is not a major player in the health insurance business. They are players in the P&C and life side of the market.

    As someone who works in health insurance (none / 0) (#63)
    by vicndabx on Wed Sep 17, 2008 at 01:40:03 PM EST
    I would agree here.  I doubt AIG has the infrastructure and manpower in place to handle health insurance and also take advantage of advancements (e.g. HIPAA and it's related Electronic Data Interchange requirements) that have to some extent improved communication between providers and payers.  I say this not from a conflicted interest perspective, although I admit I have one, but from a "i've never even heard them as a player" perspective.

    Is it an AIG Bailout or... (5.00 / 2) (#11)
    by santarita on Wed Sep 17, 2008 at 12:42:20 PM EST
    a bailout of some of the financial institutions that are creditors of AIG?

    This is a two year secured bridge loan with an equity kicker.  The interest rate is substantial.  And apparently there is a requirement that unpaid interest be converted into principal on a quarterly basis.

    It's been awhile since I did workouts of problem loans and certainly not at this level but this sounds to me more like a liquidation strategy and not a bailout of AIG.  It does give AIG breathing space but with strong incentives to make significant paydowns which may only be possible through liquidation of assets.  This is more like last ditch DIP financing than a bailout.

    the liquidation aspect is the way I heard (5.00 / 1) (#14)
    by TimNCGuy on Wed Sep 17, 2008 at 12:44:37 PM EST
    it explained on NPR this morning. This loan was supposed to AIG the room it needs to go forward with an orderly liquidation of assets. What is left when they are done the commentor wouldn't speculate on.

    As usual the Media (none / 0) (#17)
    by Militarytracy on Wed Sep 17, 2008 at 12:46:56 PM EST
    gets out their favorite monthly "buzz" words and throws them up there and the general population remains dumbed down.

    It does seem like more of a ... (none / 0) (#42)
    by santarita on Wed Sep 17, 2008 at 01:08:05 PM EST
    liquidation plan than anything else.  The $85 b is an operating line of credit that gives AIG time to liquidate (or find a capital infusion).

    If it were a bailout, it would have been a loan with a low rate of interest.


    FoxNews (5.00 / 1) (#13)
    by prose on Wed Sep 17, 2008 at 12:43:37 PM EST
    spinning this like crazy.  Saying "neither candidate is saying one real thing."  Obama just put out a 2 min. policy ad and a major speech yesterday.  They are advocating for "hearing" and "commissions."  And they also just said that Obama fund raising in Hollywood is a bigger problem than McCain saying "the fundamentals are strong."  Wishful thinking from Faux News.  The closer we get to Nov. 4, the more transparent their bias gets.

    Saying (2.00 / 2) (#51)
    by Ga6thDem on Wed Sep 17, 2008 at 01:20:22 PM EST
    the fundametals are strong is just as bad as saying that we are facing the worst financial crisis in decades and then flitting off to Hollywood to suck up money.

    They both look bad in this instance. Be honest about it.


    They are no where near as bad (5.00 / 1) (#61)
    by prose on Wed Sep 17, 2008 at 01:32:28 PM EST
    You are being just as spin-crazy as Fox.  They are STILL saying that Obama isn't doing anything.  Right now they are talking about how Obama gave a speech that no one saw - but they are the people responsible for showing it.  It's unreal.  They pretend like its Obama's fault that they aren't showing his speech or talking about his 2 minute economy ad.  

    I'm not (none / 0) (#84)
    by Ga6thDem on Wed Sep 17, 2008 at 03:17:42 PM EST
    talking about the speech by itself. Reuters had an article about this today here

    No one saw the speech because the media didn't report it. Go to yahoo and click on the video. I watched it this morning and it was the same as the reuters story above: Obama said we're in the worst financial shape in decades and then went on to a very expensive fundraiser. Fox isn't the only one that's doing what you claim.

    You can't rely on the media to make your message for you. Obama expected the media love to continue I guess. It's gone now. He's going to have to forget about the pundits and figure out a way to talk directly to the voters.


    balderdash (5.00 / 1) (#64)
    by wystler on Wed Sep 17, 2008 at 01:46:24 PM EST
    Still grinding that axe, eh?

    If Clinton were the nominee, and travelled to SoCal for a funder, you'd say, what, exactly?

    Be honest about it.


    Good grief. (none / 0) (#85)
    by Ga6thDem on Wed Sep 17, 2008 at 03:19:03 PM EST
    Why are you still in the primary?

    And you... (3.50 / 2) (#79)
    by prose on Wed Sep 17, 2008 at 02:36:01 PM EST
    don't get to lecture on honesty, btw.

    Oh, (none / 0) (#86)
    by Ga6thDem on Wed Sep 17, 2008 at 03:20:47 PM EST
    that's right I forgot you are my own personal stalker who goes around looking over my posts to make sure that they meet your aproval. Whatever.

    Not comparable to me (none / 0) (#87)
    by jar137 on Wed Sep 17, 2008 at 04:30:39 PM EST
    So, you're saying that Obama's policy statement is negated by the fact that he had a fundraiser?  I think all (or at least most) Americans accept that candidates have to fundraise.  McCain is saying everything's fine, when even the dimmest bulb can see that the financial health of the country is poor.  McCain is blind to what is going on around him; Obama is not.  To argue that Obama is essentially as blind as McCain because he held a fundraiser today is ridiculous.

    I think (none / 0) (#88)
    by Ga6thDem on Wed Sep 17, 2008 at 04:39:07 PM EST
    the problem is that the press is saying that Obama made that speech about how bad things are for the people in the country and then immediately left to hang out with hollywood and fundraise at a very expensive per plate dinner. Obamas problem appears to be hipocracy.

    Remember how Michael Moore made fun of Bush doing this kind of stuff?


    wish they would stop (none / 0) (#19)
    by TimNCGuy on Wed Sep 17, 2008 at 12:47:35 PM EST
    harping on the "fundamentals" thing. Mayor Bloomberg agreed the other day that McCain was right that the "fundamentals" are strong. I would trust his opinion more than the standard politician on that.

    As usual though it depends on what (none / 0) (#23)
    by Militarytracy on Wed Sep 17, 2008 at 12:51:50 PM EST
    the person speaking considers fundamentals.  Sixty-five year old Americans with IRA's don't have much of a fundamental to retire on right this minute.  Seventy year olds don't have a fundamental to wizz in if they had anything in the market they were hoping to live off of for the next twenty extended life can't work anymore years.

    that's true (none / 0) (#27)
    by TimNCGuy on Wed Sep 17, 2008 at 12:56:19 PM EST
    but, that is why if you are 65 or 70, you are supposed to be in "safe" investments with guaranteed rates of return and not in the market. I'm looking at that situation for myself right now. Will be retiring at the end of the year. But, won't need to access investments until about 3 years from now. I'm optmistic that everything will be fine by then. and the marke will be UP as it usually is a few years after an event like this.

    Safe investments with guaranteed rates... (5.00 / 1) (#41)
    by Jerrymcl89 on Wed Sep 17, 2008 at 01:07:43 PM EST
    ... are what AIG insures. The institutions that offer those rates need to raise the money from their own investments, which are proving to be not-so-safe, and AIG is on the hook for that.

    What's a safe investment right now? (none / 0) (#38)
    by Militarytracy on Wed Sep 17, 2008 at 01:04:59 PM EST
    My adopted mom was in those and she's taken a hard hit these past two years and she isn't getting younger, only older and more needy.

    she must not have been (none / 0) (#81)
    by TimNCGuy on Wed Sep 17, 2008 at 02:47:18 PM EST
    because investments with "guaranteed" returns don't get hit hard. They just get smaller returns because of the guarantee.

    Oh yeah, her returns have gotten (none / 0) (#93)
    by Militarytracy on Thu Sep 18, 2008 at 10:04:27 PM EST
    considerably smaller.  So small she is frightened and ends aren't meeting the same or even close, and she has had to redo and discontinue certain things like cable tv.  She no longer eats out ever.  I'm sorry you don't like talking about the truth of the existing situation.  Good luck thinking the market is going to rebound enough for you to retire in a few years.

    This is a rediculous statement (5.00 / 1) (#16)
    by JBJB on Wed Sep 17, 2008 at 12:45:00 PM EST
    by biden. Tax cuts for individuals caused AIG to to have a cash flow problem in one section of their conglomerate? Come on. We can have a debate about what is going on here and the root causes, but this is downright stupid. He is basically trying to jam in standard talking points into a question where they obviously don't belong.

    And does Joe Biden (D-MBNA) really wan to have a discussion about bankruptcy protection?

    I've been shaking my head over that one (none / 0) (#72)
    by esmense on Wed Sep 17, 2008 at 02:16:02 PM EST
    I disapprove of the tax cuts as much as anyone on the left -- but starting a response to what's happening with AIG with this nonsensical argument just weakens the Democrat's arguments overall.

    Wow. Totally wrong, Jeralyn (5.00 / 3) (#26)
    by gyrfalcon on Wed Sep 17, 2008 at 12:54:46 PM EST
    Read the article you linked to on Obama and McCain.  They are NOT-- that's NOT-- opposing the AIG bailout.  They're opposing any possible bailout of company management-- ie pay-offs and golden parachutes, etc.

    Thank God. I was about to run into the (none / 0) (#31)
    by tigercourse on Wed Sep 17, 2008 at 12:57:44 PM EST
    streets screaming.

    I think the confusion exists in (none / 0) (#37)
    by Militarytracy on Wed Sep 17, 2008 at 01:03:27 PM EST
    what constitutes a bailout and what doesn't.  The existing structure of AIG will not be preserved.  They were granted enough time to make necessary liquidations and spare what can be spared in the interest of share holders.

    Hank Greenberg doesn't think that... (none / 0) (#48)
    by santarita on Wed Sep 17, 2008 at 01:13:29 PM EST
    the common and preferred shareholders will get anything.

    One problem with a loan of this type is that every potential buyer will see that there is an opportunity to buy assets at bargain basement prices.  

    One interesting aspect of this will be to see who or what consortium buys which  assets and whether and on what terms the Fed aids the buyers.  


    Well (5.00 / 3) (#52)
    by Steve M on Wed Sep 17, 2008 at 01:21:15 PM EST
    The stock price ($2.28 as I sit here) is a pretty good proxy for what people expect the common stockholders to get at the end of the day, I think.

    Of course, I think it's unduly pessimistic to think of AIG as a failed company.  Why not think of it as a company that's worth 70 times as much as Lehman Brothers?


    Except that shareholders (none / 0) (#89)
    by jar137 on Wed Sep 17, 2008 at 05:01:07 PM EST
    go to the rear of the line.  If the assets are sold off at fire sale prices (which is usually the case) the shareholders will likely not get their c. $2/share.  

    That is why (none / 0) (#92)
    by Steve M on Wed Sep 17, 2008 at 08:57:06 PM EST
    the shares are only worth $2 when the company has much more value in it.

    Bummer (none / 0) (#50)
    by Militarytracy on Wed Sep 17, 2008 at 01:19:20 PM EST
    It's all about "friends" again and the little guy will get......

    The AIG bail out isn't a bail out (5.00 / 3) (#36)
    by Manuel on Wed Sep 17, 2008 at 01:03:15 PM EST
    It is a bridge loan to assist while AIG assets are sold off.  There are a lot of incentves in the deal to have that period be as short as possible.

    What Obama and Biden are talking about is any bail out for management which hasn't happened and won't happen.  Indeed management as well as all other ordinary stock holders (including index funds in our 401K) have taken a hit.

    No, Biden clearly opposes a bailout. (none / 0) (#39)
    by tigercourse on Wed Sep 17, 2008 at 01:05:57 PM EST
    VIEIRA:  But now we have this mess, Senator.  Do you think that AIG should be bailed out by the federal government?

    BIDEN:  No, I don't think they should be bailed out by the federal government.

    Obama's statement is less clear.


    Yes (none / 0) (#45)
    by CST on Wed Sep 17, 2008 at 01:09:33 PM EST
    I think this poster is arguing that we haven't actually bailed-out AIG though, at least not in the traditional sense that Biden was probably talking about.

    That's consistent (none / 0) (#46)
    by Manuel on Wed Sep 17, 2008 at 01:10:11 PM EST
    The loan isn't a bail out.  Biden should spin ut that way.

    So where gonna copy the.... (none / 0) (#53)
    by kdog on Wed Sep 17, 2008 at 01:24:29 PM EST
    behavior that got all the money lenders in trouble to start with, making high-risk loans that are likely to default?

    80 billion to a company on the verge of going under has to be called high-risk, no?  What happens if AIG can't pay...just add another 80 billion to our already mind-boggling debt?

    I'm not reassured that it is technically a loan and not a hand out.


    AIG is a conglomerate (5.00 / 1) (#62)
    by Manuel on Wed Sep 17, 2008 at 01:37:15 PM EST
    Many (most?) of its pieces are solvent and profitable.  They should fetch a good price in the market.  It is their financial services division that is dragging them down.  I am not sure we'll get 100 cents on the dollar but we will get something back.

    I said to my boss today (none / 0) (#59)
    by Steve M on Wed Sep 17, 2008 at 01:32:10 PM EST
    "Well, this is one loan that won't be securitized!"

    This is what passes for humor on Wall Street.


    Not too far off the mark, I think... (none / 0) (#68)
    by santarita on Wed Sep 17, 2008 at 02:08:02 PM EST
    One could argue that the Fed here is acting as the greater fool - the bank looking to build its portfolio  and comes in and takes out a loser credit from another bank.  

    I think that this isn't so much a bail out of AIG as a kind of gift to all those institutions that were relying on AIG insurance.  (I know that this is a rather simplistic way of talking about AIG's importance in the financial world.)  It allows them time to unwind their involvement with AIG.  

    Now that the Fed has a rather large stake and influence  in AIG, it will be instructive to see how it oversees the liquidation of assets.


    There is no free market (5.00 / 1) (#74)
    by Dadler on Wed Sep 17, 2008 at 02:21:55 PM EST
    Only a market allowed to operate to the great benefit of the few, the small benefit of the many, then, when the sh*t hits the fan, the few are bailed out, the many are possibly helped a little, and the rest of us just shake our heads.  The ONLY thing that holds up the value of money is people's BELIEF that it has value.  That belief is shrinking every day.  The notion this will be the last big company to look for a state solution is, logic suggests, quite a bad notion.  We are a country that manufactures so much less than we should be, has huge trade imbalances, is transferring capital hand over fist to nations that are largely hostile to us, and has an army all over the world sucking up money and doing what our founders expressely warned us against.  We are the Roman Empire in its dying days.  Hate to be cynical, but history is speaking loudly and clearly.  That we might be smarter than those who ran that Republic into the ground is arguable, though hoping we are is certainly worth holding on to.

    Will any of the federal government (5.00 / 1) (#77)
    by oculus on Wed Sep 17, 2008 at 02:29:52 PM EST
    interventions help homeowners facing foreclosure?

    I was just thinking (5.00 / 2) (#80)
    by CST on Wed Sep 17, 2008 at 02:46:37 PM EST
    Imagine if they gave all the bail-out money to people struggling with mortgages, student loans, etc...

    Wouldn't that help the credit crunch?  You know, actually helping people pay off their loans instead of giving it to the banks directly while people still lose homes?


    Should it? (none / 0) (#78)
    by sarcastic unnamed one on Wed Sep 17, 2008 at 02:35:36 PM EST
    (Rhetorical question)

    it's either bailouts or economic collapse (none / 0) (#2)
    by Exeter on Wed Sep 17, 2008 at 12:33:00 PM EST
    Yes, we need to prevent from happening again, but letting the fire just burn itself out is crazy.

    Worked in Yellowstone :) (none / 0) (#10)
    by Militarytracy on Wed Sep 17, 2008 at 12:41:40 PM EST
    Just sayin, market correcting itself and all that.

    Tough Call (none / 0) (#3)
    by nell on Wed Sep 17, 2008 at 12:35:22 PM EST
    Bail out is bad, but would allowing people to suffer as a result of this economic failure would also be really bad...

    I don't know that there was much of a choice...

    We'd rather pass the eventual suffering... (none / 0) (#54)
    by kdog on Wed Sep 17, 2008 at 01:25:37 PM EST
    along to future generations?  How selfish of us!

    I'm not sure it's clear that that's the (none / 0) (#58)
    by sarcastic unnamed one on Wed Sep 17, 2008 at 01:30:07 PM EST
    unavoidable result.

    I guess the fundamental question is, and no one has a crystal ball, can AIG be sold for 85B and pay off the loan?

    Today? Probably not. In the future, as a result of the loan? Who knows.


    I love to gamble.... (none / 0) (#66)
    by kdog on Wed Sep 17, 2008 at 02:02:33 PM EST
    and all, but not using somebody else's neck as collateral, only my own.  Especially not the neck of today's kindergarteners!

    It's done now, I guess all we can do is hope it all works out.


    Honestly, this isn't a gamble. Even if (none / 0) (#67)
    by tigercourse on Wed Sep 17, 2008 at 02:04:40 PM EST
    the government never sees any of that 80 billion again, it will still be worth it if we prevent a total economic collapse.

    I don't think we are preventing anything.... (none / 0) (#82)
    by kdog on Wed Sep 17, 2008 at 02:49:06 PM EST
    just postponing...till after everybody who helped create this mess is dead.

    I think they are wrong (none / 0) (#4)
    by flyerhawk on Wed Sep 17, 2008 at 12:37:34 PM EST
    I know why they are saying it but they are wrong.

    AIG collapsing would cause devastation on the Street.  

    I would sooner see Merrill collapse than AIG.

    I agree... (none / 0) (#15)
    by Thanin on Wed Sep 17, 2008 at 12:44:55 PM EST
    even though Im way out of my league with this stuff, it sounds like if AIG went under, things would be really freaking bad.  I hope this gambit pays off.

    Wow. Bold move. Hope it's good tactics (none / 0) (#5)
    by Faust on Wed Sep 17, 2008 at 12:39:27 PM EST

    I have to be fair to Alabama Republican (none / 0) (#7)
    by Militarytracy on Wed Sep 17, 2008 at 12:39:49 PM EST
    Senator Shelby also even though I don't like it much, but he says NO to bailing out AIG too.

    I take back what I once said about Biden. (none / 0) (#9)
    by tigercourse on Wed Sep 17, 2008 at 12:40:48 PM EST
    He has no business being President. Even after AIG was bailed out, the market has dropped 3.5 percent. Can you imagine what would happen if it hadn't been? Fool.

    McCain and Obama Agree (none / 0) (#18)
    by Jeralyn on Wed Sep 17, 2008 at 12:47:31 PM EST
    there should be no bailout.

    That's not what the LA Times said (5.00 / 2) (#33)
    by sarcastic unnamed one on Wed Sep 17, 2008 at 01:01:51 PM EST
    Obama, in his statement on AIG, argued that the federal government's bailout must not reward those who drove the company to the brink of disaster

    Really? Obama agrees with this? I cannot (none / 0) (#21)
    by tigercourse on Wed Sep 17, 2008 at 12:49:24 PM EST
    express how worried that makes me.

    Politics. (none / 0) (#24)
    by sarcastic unnamed one on Wed Sep 17, 2008 at 12:51:52 PM EST
    They both need to define thmeselves as not Bush.

    The best way to define yourself as not (none / 0) (#25)
    by tigercourse on Wed Sep 17, 2008 at 12:53:45 PM EST
    like Bush is to not advocate terrible, terrible policies.

    No argument from me. (none / 0) (#30)
    by sarcastic unnamed one on Wed Sep 17, 2008 at 12:57:21 PM EST
    That's wrong, Jeralyn (none / 0) (#34)
    by gyrfalcon on Wed Sep 17, 2008 at 01:02:37 PM EST
    Read the article you yourself linked to.

    After 400 years in the Senate, I would have (none / 0) (#20)
    by tigercourse on Wed Sep 17, 2008 at 12:48:26 PM EST
    thought Biden might have learned something about the economy. I hope Obama and his advisors never, ever listen to this guy once he's elected.

    Did Biden really say this? (none / 0) (#22)
    by Green26 on Wed Sep 17, 2008 at 12:51:33 PM EST
    "We should try to correct the problems that caused this. And what's caused this [apparently referring to AIG's problems and the financial crisis]? The profligate tax cuts to the very, very wealthy...."

    The tax cuts to the wealthy caused AIG's problems and the current financial crisis?

    You've got to be kidding. That is just plain stupid.

    In another Tuesday morning appearance on NBC's 'Today' show, Biden spoke out against a government bailout of embattled insurance giant AIG, instead arguing that the government should look at the source of the problems.

    "We should try to correct the problems that caused this," he said. "And what's caused this? The profligate tax cuts to the very, very wealthy that John wants to continue."

    When NBC's Meredith Vieira pointed out that "many economists" believe that tax increases for the wealthy would hurt the struggling economy, Biden replied, "I don't know any economists who are saying that."

    Financial Socialism (none / 0) (#29)
    by pluege on Wed Sep 17, 2008 at 12:56:45 PM EST
    where's the republican shrieking about a socialized financial system? After all, the government now owns 80% of the largest insurance company, two companies that own half of all mortgages in the nation, and a collateral stake in a big chunk of Morgan Stanley, all funded by the lowly American taxpayer.

    Oh I forgot, using taxpayer funds to bailout fatcat corporate executives and investors is OK; using taxpayer money to help the average citizenry survive by offering healthcare is a socialist no-no in republico-doublespeak.

    A very large percentage of the people (none / 0) (#32)
    by tigercourse on Wed Sep 17, 2008 at 12:59:01 PM EST
    in this country are investors. If AIG went under, non investors would feel it. Everyone would feel it. It would be an economic disaster.

    We should feel it.... (none / 0) (#70)
    by kdog on Wed Sep 17, 2008 at 02:14:01 PM EST
    we made this mess, no?

    If this gambit doesn't work, our kids and grandkids are gonna feel it...big time.

    It's all very unsavory to me, we should bite our own bullet.  It would be willing if the feds had 80 billion to loan out, but last I checked the feds are in the red too...big time.


    s/b... (none / 0) (#71)
    by kdog on Wed Sep 17, 2008 at 02:14:52 PM EST
    It would be one thing, not willing.  Oops.

    I'm sure falling into another Great (none / 0) (#73)
    by tigercourse on Wed Sep 17, 2008 at 02:16:54 PM EST
    Depression would teach us all a lesson. But I'm not interested in schooling people. I'm interested in good governance. And good governance does not include letting the country fall apart.

    I'm not convinced.... (none / 0) (#83)
    by kdog on Wed Sep 17, 2008 at 02:54:12 PM EST
    the country would "fall apart".  Will it hurt...hell yeah it will...but we could survive it.

    I could see the country falling apart because of the national debt...that we just added to, big time.


    What does Obama mean when he says (none / 0) (#35)
    by tigercourse on Wed Sep 17, 2008 at 01:02:43 PM EST
    "It must not bail out the shareholders"? I don't really understand that, and who does he think the shareholders of AIG are? It's average American people with IRAs and 401ks.

    My grandfather was also a Democrat (none / 0) (#47)
    by Militarytracy on Wed Sep 17, 2008 at 01:10:56 PM EST
    and he taught me that it was very stupid to make "blind" investments and he didn't do it. He also taught me the market is cyclic and this retire off the market was no promise of any kind, you have to keep track of and watch your money.  You have to be responsible for yourself in this world.  If you were a shareholder in AIG then you obviously believed in the company and how they were operating, why should you be bailed out?

    A wise man once told me (none / 0) (#43)
    by bocajeff on Wed Sep 17, 2008 at 01:08:42 PM EST
    "if you owe the electric company $10 then you don't sleep at night. If you owe the electic company $10 million then THEY don't sleep at night". The point is that these institutions are so big that any failure will cause havoc not just in the streets but throughout the world.

    None of the 4 candidates have a clue or, at the very best, or just trying to score political points. But Sen. Biden is the LAST person who should be speaking about this issue considering he's been in the Senate since Nixon, represents some of the largest corps in the world, and has a son who has made a fortune from all of this.

    This is NOT a collapse brought on by poor policies, but a collapse brought on by incredibly poor management with little oversight by the Fed and SEC.

    Obama gets the name of AIG wrong. (none / 0) (#44)
    by tigercourse on Wed Sep 17, 2008 at 01:09:13 PM EST
    in his statement, he called it the American Insurance Group. It's the American International Group.

    I guess he isn't a shareholder ;) (none / 0) (#49)
    by Militarytracy on Wed Sep 17, 2008 at 01:14:51 PM EST
    Don't have a lion or something :)

    Is Biden overdoing it? (none / 0) (#55)
    by Manuel on Wed Sep 17, 2008 at 01:26:20 PM EST
    This is bordering on demagogue territory.  Of course, the issue favors the Democratic ticket so he has some room.  I'd worry about a backlash, however.

    To comment on the bailout itself, (none / 0) (#57)
    by Makarov on Wed Sep 17, 2008 at 01:28:01 PM EST
    the government was exactly right to do what they did - provide a large bridge loan for operating capital reserve.

    The impact of the failure of AIG would be felt worldwide. It's somewhat complicated, but AIG provides a type of insurance that isn't insurance. They are big in Credit Default Swaps, CDS (not Clinton Derangement Syndrome).

    A CDS is essentially an insurance policy against the default of an unsecured loan, like corporate bonds. Everyone from local governments to pension funds to depository banks buys CDS. AIG also provided CDS for owners of Mortgage Back Securities and other combined debt derivatives.

    Allowing AIG to fail would introduce huge volatility in the CDS market, and lead to additional tightening of credit both in the US and worldwide. Many organizations could be forced to sell off otherwise good bonds and investments, or face reductions in their own credit ratings as a result of being unable to obtain "insurance".

    The bankruptcy of AIG could have led to another Depression. We already have enough signs of one (deflation among them) in the US as it is.

    I have lots of bonds (none / 0) (#60)
    by Militarytracy on Wed Sep 17, 2008 at 01:32:15 PM EST
    now it's my turn to feel the pain.  Oh well, I knew this was coming.  Did what I could when I could do it.  This is going to have to pinch somewhere.

    Sounds like a bail out to me (none / 0) (#65)
    by mmc9431 on Wed Sep 17, 2008 at 01:56:52 PM EST
    When the Federal government puts up 80 billion to protect a company from clapsing, it's a bailout no matter how you look at it.

    It's Not Preventing the Collapse... (5.00 / 1) (#69)
    by santarita on Wed Sep 17, 2008 at 02:12:03 PM EST
    it is allowing for the collapse in a controlled way.

    I wonder if Greenberg or a vulture capital firm can come up with the bucks to buy the Fed loan?


    Hmm. Conflicted emotions here. (none / 0) (#76)
    by Pegasus on Wed Sep 17, 2008 at 02:24:33 PM EST
    On the one hand: c'mon, Senator Biden.  The Fed literally had no other choice here.  Let's be reasonable.

    On the other hand: You know what, let's go ahead and make all the political hay we possibly can out of this.  It's certainly a political winner for the Democratic ticket.

    What Cramer said: (none / 0) (#91)
    by scribe on Wed Sep 17, 2008 at 05:46:28 PM EST
    "Vladimir Lenin did not destroy as much capital as this [Republican] SEC."