Latest AIG bailout focuses on change
TEXT OF STORY
Bill Radke: This morning, insurance giant AIG broke the record for biggest quarterly loss in history. AIG lost $61.7 billion in the fourth quarter. In response, the U.S. government will bail out AIG
for the fourth time. This latest rescue is different from the first few tries, as Marketplace’s Dan Grech tells us.
Dan Grech: The first three bailouts of AIG were aimed at helping the insurance giant weather the economic downturn. This latest bailout seems to set the stage for a breakup of the 90-year-old firm.
The new rescue plan provides an additional $30 billion in loans. It also cancels out a portion of the loans AIG received last year.
In exchange, the government gets preferred shares that pay a dividend. And the government takes control of two AIG units that sell life insurance overseas, which the government can later sell. A Treasury official said this morning AIG’s roots in the global economy are so broad and deep, its collapse would spell disaster.
Hugh Johnson is with Johnson Illington Advisors, a money management firm:
Hugh Johnson: Is it crystal clear that that would be the outcome? No. You don’t want to test it though.
With the latest bailout of AIG, U.S. taxpayers are now on the hook for $163 billion.
I’m Dan Grech for Marketplace.
There’s a lot happening in the world. Through it all, Marketplace is here for you.
You rely on Marketplace to break down the world’s events and tell you how it affects you in a fact-based, approachable way. We rely on your financial support to keep making that possible.
Your donation today powers the independent journalism that you rely on. For just $5/month, you can help sustain Marketplace so we can keep reporting on the things that matter to you.
