AIG Bailout: $85B in Loans, 80% AIG Taxpayer Owned
Posted by Barry Ritholtz on Tuesday, September 16, 2008 | 10:48 PM
Here are 4 items regarding the AIG bailout that are worth thinking about:
1) AIG is the world's biggest insure. Had they gone belly up, they might have turned the current recession into a depression;
2) AIG was a huge Credit Default Swap writer, and that insurance required collateral to be posted, depending upon such factors as credit rating and credit spreads;
3) Hence, why this was a liquidity issue, not an insolvency problem;
4) Moral Hazard, successful avoided in the Lehman Brothers bankruptcy, was put aside given the massive size of AIG -- if any firm was too big to fail, it was them.
No comments:
Post a Comment