AIG gets $85 billion loan from Federal Reserve; move prevents massive global money meltdown.
Fort Worth, TX (WiredPRNews.com)—The Federal Reserve Board approved an $85 billion loan to prevent American International Group from going into bankruptcy and causing worldwide financial panic
The unprecedented move puts the government in charge of 79.9% of the company, according to a CNNmoney.com article by Tami Luhby dated September 17, 2008. The article stated that the federal operation of the firm means that it will have veto power over dividend payments and sales of company assets.
Like the recent bailout of Freddie Mac and Fannie Mae, some financial analysts are saying that the move was necessary because the downside would have been catastrophic. In an interview on the nationally-syndicated Mike Gallagher radio show, CNBC’s Larry Kudlow said that while he supports free market capitalism, allowing an insurer of this size to collapse would have had massive worldwide repercussions.
AIG holds $1.1 trillion in assets for 74 million customers in 130 nations, according to the CNNmoney.com article. The CNNmoney.com article stated that Edward Liddy, the former head of Allstate Insurance, will take over as AIG’s Chief Executive Officer.
Speaker of the House, Nancy Pelosi (D-CA), said that the economic woes are because of President Bush, however, the democrat-controlled congress has yet to pass an energy bill that will allow substantial offshore drilling. Pelosi said that the democrats bear no responsibility for the economic crisis on Wall Street, according to a September 16, 2008 article by Klaus Marre that appeared in TheHill.com.
Late Tuesday, House Resolution 6899 passed by a vote of 236 to 189, according to a CNN.com report that appeared on September 17, 2008 on the website’s politics page.