AIG got bailed! *whew*

[MOM2SNOX]

 Looks like the government stepped in and helped the largest insurance company in the world.  $85 BILLION loan over the next 4 years.  I remember setting up a life policy with AIG waaaaaayyy back in the early 80's.  Glad to see it's still safe.. :)

[beachlover]

 thank goodness!  if they went down, there is no hope for anyone else

[Gypsymonkey]

 It's actually pretty scary how connected everything is once you start to think about it. ...

[naney1952]

Yeah that was a big save! I don't think we have seen the worst of it yet.   

[JeanG]

Apparently AIG is a holding company for about 240 other insurance companies - the AIG policies were somehow covered anyway...I didn't quite catch whether it was a bond or what, but the AIG policies were safe. One of the other companies covered was Northwestern and I have no idea whether or not those policies were also covered by bond or whatever as AIG policies were.

Personally, I'm sick and tired of the taxpayers bailing out private companies like Chrysler, Bear-Stern and AIG. That money comes out of OUR pockets...and I don't have $20 for groceries, much less $85 billion!!  These are PRIVATE companies - if they go belly-up, I don't think the government (meaning us, as taxpayers)  should bail them out. It just drives me crazy - which is a short drive, let me tell you!    Where did the idea of free enterprise go?  I know the government now has 79.9% share in AIG and board control and may eventually recoup some of the $$...but with us trillions in debt already, every time we bail out a private company, I think the government is working against the taxpayers. I'd really like to hear WHY people here think we should cover private companies...maybe you can think of some reasons that would make me reconsider my opinion.

[MOM2SNOX]

 Jean ~ I'm just returning from my morning run, gotta pop into the shower and head off to work but I'll definitely give this a respond later today.  Just keep in mind one thing; AIG was given a loan.  With interest.  They have 4 years to pay it off and currently ALL their assets (in the trillions!) belong to the government.

Be back later to share more of why this is a GOOD thing for the taxpayers.

[unkit]

 big whew.  double whew.

btw the life insurance policies were never in danger.  due to regulations, their funds were fully covered.  and separate.  so that was not affected by the crisis.  thank goodness.  but I know lots of educated people that were very concerned about that issue as well.

and this is not just another private company getting bailed out by the govt.  which I am very much against on general principal. 
the big concern was that it was likely that without the bailout, home loan would be called.  meaning that the bank could call for your mortgage to be due in full.  crazy.    that would sink our economy and seriously ripple the international economies as well.

my question is regarding accounting.  when AIG was being looked into, no one could figure out what was what with the accounting.  AIG followed GAAP (accounting standards).   So should GAAP be examined?  is the accounting standards partially to blame for this crisis?

[JeanG]

Looking forward to your post as to why this is a good thing for taxpayers. It's a loan - how can the gov't control all assets? Especially since we have 79.9% interest? (There was something about if the gov't had an 80% interest or more it would change the tax status.) I don't understand it all...I'm getting my info from CNBC if that helps.

How could they foreclose when the mortgage says that as long as you make your payments on time, you're safe??  I don't understand that at all, either!

[JeanG]

OK - CNN just said the gov't issued a 40 billion Short Term Federal Note for 2 years at 11% interest.  I'm guessing the 11% interest would be a tidy sum.

[JeanellePaige]

 I am all confused about this. I consider myself educated, but man am I lost when it comes to this stuff!! I am glad to be reading this thread to learn a little bit!

[Queen Mum]

 Insurance policies would be safe because of the regulations.

But this is really hitting the financial world hard.

[MLee]

 Yeah Whew, because America had $85 billion dollars just lying around to give another failing company who can't run their own business.

Yes, logically I know the reasons why they did it. It doesn't mean I agree with it. America doesn't have $85 billion dollars, which means we had to borrow from someone else to get it to give to them. Now who did we just sell part of our soul to?

[Flapdoodle]

 It's actually pretty scary how connected everything is once you start to think about it. ...

You are so right. I've been learning a lot from this fiasco.

[craftyfool]

 
my question is regarding accounting.  when AIG was being looked into, no one could figure out what was what with the accounting.  AIG followed GAAP (accounting standards).   So should GAAP be examined?  is the accounting standards partially to blame for this crisis?

Ok...so I haven't been paying attention, please ignore my ignorance here, but when you say "No on could figure out what was what with the accounting" what do you mean?

The books were a mess and the auditors ignored that and issued a clean opinion?  Or they didn't find anything wrong with the accounting and this still happened?

Following GAAP is only going to help a company IF they truly do follow GAAP and aren't just playing lip service to it.

What accounting firm audited them, does anyone know??

(can you tell I'm an accountant....?)

[SBcrazee]

I have very mixed feelings about this. On the one hand how does a country with a $9.6 trillion deficit have $85 Billion line of credit to lend to AIG? But on the other hand I can't imagine the chaos it would had created had AIG filed for Bankruptcy? And how does a company that is so close to bankruptcy come out of this & pay back with a 11% interest now? Either way the people are screwed.

[PezKat]

 I also consider myself an intelligent person but am at a loss when it comes to financial stuff.  Especially bankruptcy... for example I know Donald Trump has filed bankruptcy (repeatedly?) but is still considered a very wealthy - and "successful" - businessman!   I've done my own taxes (even for a direct sales business) & work in bookkeeping but just. don't. get. some of it.

[craftyfool]

 Unfortunately, bankruptcy is some people's answer to paying off bills.  Sad, but true.  Even "wealthy, successful" people. 

It was put in place to help people and I know that it DOES help some people.  Honest, hardworking people who just get overextended or have a crisis...whatever.  There may be (and probably are) people who post here who have filed.  I have no problem with that.

But it irks the heck out of me when people file simply because they don't want to pay what they owe. Kinda like that story Kara posted that someone didn't pay her company all that $$?  That is just wrong.

And I think I just got off on a tangent...

Anyone have a link to the AIG story? 

[MLee]

 For the record let me say that I know "the government" had to do this bailout, that CC companies, etc. would have failed and the American people would have been up a creek had they not bailed them out. However, this is just a symptom of a greater illness in the economy and bailing out this company isn't going to fix the problem. This is like putting a bandaid on a gaping wound that is still bleeding all over the place.

[SBcrazee]

 big whew.  double whew.

btw the life insurance policies were never in danger.  due to regulations, their funds were fully covered.  and separate.  so that was not affected by the crisis.  thank goodness.  but I know lots of educated people that were very concerned about that issue as well.

and this is not just another private company getting bailed out by the govt.  which I am very much against on general principal. 
the big concern was that it was likely that without the bailout, home loan would be called.  meaning that the bank could call for your mortgage to be due in full.  crazy.    that would sink our economy and seriously ripple the international economies as well.

my question is regarding accounting.  when AIG was being looked into, no one could figure out what was what with the accounting.  AIG followed GAAP (accounting standards).   So should GAAP be examined?  is the accounting standards partially to blame for this crisis?

Remember the SOX Act that was enforced back in 2002 because of Enron. SOx compliancy affected so many  big companies for years. We had to put in so much extra work & provides so much extra documentation of our past work. I wouldn't be surprised if this brings about another Act & the US adopts IFRS which the UK, Australia, Japan,Russia & other countries have already adopted.

[Queen Mum]

Right now the stock market is at 10777.   That rots big time.

IT's scaring the livign daylights out of me.   However, I'm looking to see where I can come up with a few more bucks to put in to my retirement fund while the prices are low.

There goes my extra spending $$.