New York Fed Gets an AIG Payoff To Trade Risk With the Treasury and Taxpayers
Wait a second, how exactly is this a good thing for taxpayers? Tim Geithner seems to believe holding a 92% stake in AIG and paying off the NY Fed's part in AIG will be the best option for the taxpayer. Maybe I'm just a complete idiot when it comes to these things so can someone besides Geithner please explain how this would benefit us?
Sounds to me like the NY Fed was getting impatient and wanted their damn money. Makes you wonder what they know that we don't, doesn't it?
American International Group Inc laid out a plan on Thursday that sets the insurer on an accelerated path for payback of bailout money, but it also increases the risk for the U.S. government.
The plan, which comes a little over two years after AIG was rescued with an aid package that ballooned to $182.3 billion, will see the Federal Reserve Bank of New York getting repaid in full and ending its involvement in AIG, leaving the company to deal with just the Treasury Department.
The Treasury will convert some of its AIG securities into common shares, raising its stake in the company to 92.1 percent from nearly 80 percent. That stake will be sold off over time.
The Treasury will also effectively buy out the Fed's interest in two large AIG units that are being sold.
Said Timmy about the deal:
"The exit strategy announced today dramatically accelerates the timeline for AIG's repayment and puts taxpayers in a considerably stronger position to recoup our investment in the company," Geithner said in a statement issued shortly after AIG announced its plan.
That's a big fat IF as in IF we ever get our money back and IF things go as planned. If they don't, the government owns 92% in a crap company and the NY Fed has scored its payback.
Wouldn't a better deal for taxpayers be one in which the private Federal Reserve is responsible for AIG's mess since it was the NY Fed's idea to get us stuck in this mess? As if that would ever happen.