[Marxism] Fed Stares at AIG, and blinks

[S. Artesian]

http://www.federalreserve.gov/newsevents/press/other/20090302a.htm



Fed revises the terms of its preferred shares so AIG does not have to pay dividends.  That's taking care of the taxpayers' interests, sure.  Whatever happened to fiduciary responsibility?

Fed creates another special revolving credit facility of up to $30 billion which AIG can access in exchange for more non-dividend paying preferred shares.

As for the already existing $60 billion revolving credit facility--  Fed gets, not preferred stock, which isn't quite so preferred anyway, but preferred interest in  two SPVs holding the all common stock of AIG's like insurance holding company subsidiaries (which might still be profitable).  Fed estimates its interest values out at app $26 billion.

Fed will make loans to these life insurance SPVs of $8.5 billlion,  which will collateralized by the issuance of securities based on the cash flow from the insurance premiums.  Does this sound familiar???? Can you say  CDO?  ABS?  SIV?   These loans would then be used by AIG to repay an equivalent amount of Revolving Credit facility debt.  Are you fucking kidding me?  Christ, they put Andy Fastow in jail for doing this shit.  Free Andy Fastow!

So I give you the money; you issue securities collateralized by cash flow from insurance policies in companies that I now have preferred interests in common stock.  You take the money I gave you with my left hand, and use it to repay the additional money I am lending you with my right hand which is was supposedly secured by the issuance of preferred shares, which don't pay dividends.  "Hey Rocky, watch me pull a rabbit out of my hat"  Hey moose, that's my hat, and the rabbit's dead.

And what must AIG do?  It must issue for the sole benefit of the US Treasury,  preferred shares representing a 77.9% equity interest in AIG by March 4 2009.  

Well, as of Friday Feb 27  the equity in AIG was about $1.35 billion... 

Amazing....even for this bunch of murdering morons.


Crazy Feddie-- prices so low he's actually giving it all away.