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aig rescue September 16, 2008

Posted by Bradley in : Uncategorized , trackback

Some firms really are too big to fail. But after years of debate about the Washington consensus, it’s striking to see a US based insurance company acquired by the US Government. The Fed announced a loan of up to $85 billion to AIG:

The interests of taxpayers are protected by key terms of the loan. The loan is collateralized by all the assets of AIG, and of its primary non-regulated subsidiaries. These assets include the stock of substantially all of the regulated subsidiaries. The loan is expected to be repaid from the proceeds of the sale of the firm’s assets. The U.S. government will receive a 79.9 percent equity interest in AIG and has the right to veto the payment of dividends to common and preferred shareholders.

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