This time of year is particularly a dangerous time for us taxpayers. It is a time when those in Washington can slip out bad news but, chances are less people will notice it. The reason for this is because everyone is running around for the Christmas holidays. Even most of the media empties out of this town for the next week or so. Not me. I am looking for the bad news leaked out. I think I found it in today's Washington Post. It concerns AIG and how it was able to get some of those nasty credit default swaps off it's books. Here are the money quotes:"American International Group retired $16 billion in credit default swaps, the contracts that almost caused the company's collapse, after buying the underlying securities with help from the Federal Reserve."
"The fund created by the Fed and AIG to protect the insurer's customers from losses has now purchased collateralized debt obligations with a face value of about $62.1 billion, the firm said in a statement."
"The business guaranteed more than $70 billion in securities created by pools of different kinds of debt, including sub prime mortgages, that plunged in value. The federal government committed $150 billion to bail out AIG and prevent losses at investment banks that bought protection on fixed-income securities from the insurer."
Whoa! AIG only guaranteed $70 billion in securities. But, we taxpayers gave them $85 billion and then another $65 billion in loans? What wrong with this picture?
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