[BUMPED - SEE UPDATE BELOW]
Although it's hard to imagine erstwhile insurance behemoth AIG in the role of the hungry naif, that's precisely the request being made by the head of that brain trust:
"AIG is asking the US government for a new bail-out less than two months after the Federal Reserve came to the rescue of the stricken insurer with an $85bn loan, according to people close to the situation." [free reg required]
Well sure, better get in there before those irresponsible auto industry chaps drain the well completely dry. It's just government money after all, not actually paid for by the blood, sweat and tears of the American taxpayer.
AIG rocket surgeons were huddled late in the week with gummint pencil pushers, working out a deal that would tranfer millions (billions?) of dollars of "troubled mortgage-backed securities" from AIG's books to ours. And, like the poor saps who opted for those "troubled" mortgages, AIG is now complaining about the interest rate of the original loan. Currently 8 and a half percent over the London Interbank Borrowing Rate (LIBOR), AIG points to the "5 per cent interest rate paid by the banks that recently sold preferred shares to the government." [emphasis added] Um, geniuses, what part of "troubled mortgage-backed securities" don't you get?
If you sense a bit of sarcasm here, it's because we pointed out at the beginning that this was a bone-numbingly bad idea, and this latest installment just underscores that.
But wait, it gets better:
"The U.S. government was near a deal Sunday night to scrap its original $123 billion bailout of American International Group Inc. and replace it with a new $150 billion package, according to people familiar with the matter."
Of course this makes great sense, since the rocket surgeons who run AIG have shown themselves to be such thoughtful stewards of our money. One supposes that this 20%-plus increase will come with a lower interest rate [ed: natch!], thus transferring even more of our wealth to the coffers of the insurance giant.
But that was then, and this is now:
"The Federal Reserve and Treasury Department Monday upped the stakes in the government's role in American International Group to more than $150 billion with a restructuring of its loan package that includes $40 billion in new funding from the financial rescue package and other measures to help the ailing firm."
But of course.
In addition to the extra bucket of moola, our gummint is lowering AIG's interest rate by an additional 5.5%, which comes out to 3% plus the aforementioned LIBOR rate (currently at 2.39%). Not a bad deal, all things considered.
And because just throwing more money at something isn't nearly sufficient, The Fed is ponying up another $22+ billion of our cash to set up a special LLC (limited liability corporation) to buy those "troubled mortgage-backed securities" for us.
Where, exactly, does this end?
Oh, one more thing.
Bob just emailed this to me:
"The Federal Reserve is refusing to identify the recipients of almost $2 trillion of emergency loans from American taxpayers or the troubled assets the central bank is accepting as collateral."
On the one hand, this is unconscionable. On the other, these are the people that many folks want running our health care system. Where, exactly, is the transparency in this transaction, and why would we want this kind of thinking when we look at our health?
"Careful Stewards" UPDATE: Fresh on the heels of "poor mouthing" the raw deal they were offered, looks like AIG execs have some 'splainin' to do:
"Even as the company was pleading the federal government for another $40 billion dollars in loans, AIG sent top executives to a secret gathering at a luxury resort in Phoenix last week."
CORRECTION: Apparently, these folks were "independent financial advisors," not AIG execs. Still, this demonstrates the kind of brilliant thinking that goes into the AIG "decision making process:" let's see if we can frivolously spend even more of the taxpayors' dollars.