AIG bailout earns 18 billion in tax payer profits

The Federal Reserve finally has wiped its hands clean of AIG and turned a nearly $18 billion profit for taxpayers in the process.

That said, the U.S. government is not entirely free of AIG. The Treasury Department still owns $29 billion, or roughly 53% of AIG's common stock. The Treasury Department has said it too expects to make a profit on that investment, as it sells the shares over time.

above from CNN Money article

The U.S. Treasury and Federal Reserve together committed up to $182.3 billion to support AIG at the height of the crisis, and at its peak the New York Fed lent over $90 billion to the company and investment vehicles that purchased AIG-linked assets. The regional Fed bank has been fully repaid on its various loans.

The Fed's moves were criticized from some quarters as a backdoor bailout for banks that exposed U.S. taxpayers to undue risks. But from the outset, Fed officials including Chairman Ben Bernanke said they were acting to protect the country from financial meltdown and expected to be fully repaid on loans provided to support AIG.

"It's a happy ending with the Fed making a handsome profit—but the purpose of the purchases was to stabilize the financial system and not to make money," said Sung-Won Sohn, an economics professor at California State University, Channel Islands.

above from Wall Street Journal article

By 2022, the bailouts are expected to produce a profit for taxpayers – as much as $163 billion in a best-case scenario. That’s a stark turnaround from predictions of hundreds of billions of dollars in losses in the immediate aftermath of the unprecedented interventions.

above from Los Angeles Times

So the bailouts may turn out to be okay from a pure financial perspective, not to say everything is fine as it relates to business and the federal government.

But I must ask how much was the money worth then and how little is it worth now and how much less will it be worth when they get all the money they can from it?

Profit for tax payers?

Is the government going to pay that money back to the people, or spend it on the next stupid war?

reply to post by mithrawept


The government is spending more than revenue allows, so bailout profits are probably best spent on debt bond interest....

This was a federal action more than a public action, so I would rather see them use it to stabilize the government against a deficit crisis than do something like a mass payout and giving everyone a thousand dollar check.

Oh, hey look, it's fascism

$7.77 Trillion

Add up guarantees and lending limits, and the Fed had committed $7.77 trillion as of March 2009 to rescuing the financial system, more than half the value of everything produced in the U.S. that year.

“TARP at least had some strings attached,” says Brad Miller, a North Carolina Democrat on the House Financial Services Committee, referring to the program’s executive-pay ceiling. “With the Fed programs, there was nothing.”

Lawmakers knew none of this.

.

www.bloomberg.com...

Pretty sure we never got the 7.7 trillion back

reply to post by PatrickGarrow17


Really? Because I'm sure I could do a lot better with a $1000 check than the government can do with anything. They'll likely blow it on more bombs, or sending employees on five star vacations.

reply to post by Malynn


If everyone got 1,000 dollars, a good proportion of that will end up back in the hands of banks and financiers through mortgages and credit.

Giving everyone a few comfortable months is nothing compared to trying to prevent the collapse of the entire system under the weight of a 16 Trillion dollar debt.

You're right, war is a big part of that. But the government isn't COMPLETELY wasting money, as evidence by the results outlined in the OP.

The government deserves some blame for societal failures, but citizens aren't functioning at an optimum level either.

A profit by 2022. More smoke and mirrors aimed at legitimizing that whole mess. That money will never see the lint in my pocket. Ever.

AIG... Good Grief...

reply to post by RealSpoke

Try errr, $16 Trillion.

The Fed's $16 Trillion Bailouts Under-reported

The findings verify that over $16 trillion was allocated to corporations and banks internationally, purportedly for “financial assistance” during and after the 2008 fiscal crisis.