March 08, 2009
Who has AIG's money?
Or, in the way this is panning out, not so much who has AIG's money but who has the taxpayers' money that has been poured into AIG?
The Wall Street Journal reported on Friday that about $50 billion of more than $173 billion that the U.S. government has poured into American International Group Inc since last fall has been paid to at least two dozen U.S. and foreign financial institutions.
It's not so much that the money has gone to other financial institutions. That was always understood to be the thing that was going to happen. Indeed, that's the very reason the bailout was done in the first place. To keep the financial system afloat.
However, in a political sense, there's going to be a kickback to the idea that some of this money will have gone to foreign institutions. And, given that AIG's CDS writing arm was based in London it's pretty apparent that a great deal of it will indeed go to foreigners.
Doesn't change the economics of the bailout but it sure does change the politics of it.
As an aside, perhaps they should have looked at a debt consolidation resource. Think it might have helped?
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Is this any different though from the suggestion that the underwritten toxic debt our government has guaranteed is mostly to overseas borrowers? I think the figure for RBS was that 80% of their bad loan book was loans overseas.
Posted by: Jock | Mar 9, 2009 12:18:05 AM