Who got bailed out -- AIG, Bush or McCain?

The White House admitted today that even in the rosiest of scenarios about the outcome of the government's $85-billion bail out of insurer American International Group Inc., taxpayers will likely get the short end.

"The taxpayers will be paid back first," said White House Press Secretary Dana Perino in talking about the federal government's new 80% stake in AIG at the daily White House briefing. But when a reporter noted that taxpayers "may not be paid back at all," Perino acknowledged, "That is true."

Meanwhile, the top Republican on the Senate Banking Committee accused the Bush administration of sending "a mixed message" in bailing out AIG but not Lehman Brothers.

Sen. Richard Shelby, who opposed the AIG bail out, met with Treasury Secretary Henry M. Paulson to convey his concerns. The Alabama Republican told the Associated Press:

I was not satisfied with his answers. I said, "Mr. Secretary ... you're picking and choosing. You have to have a set policy."

Perino said she understands why Americans might be confused about why the administration would put taxpayer money at risk for some companies and not others. "We are dealing with very challenging times," she said.

In an interview on CNBC, Shelby elaborated, saying that AIG is not even regulated by the Federal Reserve. "I think they made a mistake," he said. "The best arbitrar of the market is the market itself." Acknowledging that a market-driven correction would be painful, he said, "Where do we draw a line in sand? ... Enough is enough. ... There's only so much taxpayer can shoulder."

Finally, a progressive website called opednews.com, asked this question:

Did George Bush bail out AIG to save AIG or John McCain and the neocons?

-- Johanna Neuman

Photo: Pablo Martinez Monsivais / Associated Press

Comments

[Pat]

$85B is $726 per taxpayer. My wife and I just bought $1452 worth of a bankrupt company with books so bad no other company would touch them. Thanks Washington.

[Bryan Williams]

Is Canada sounding good to anyone else about now?

[ScrewedUp]

What is going on with this Administration? It seems like they're just rolling the dice to figure out who to save. I want my taxes going to more sensible things like schools, roads, the law...etc. Stop saving these greedy bastards and increasing the national debt! They deserve what they get. Do you think they are getting lobbied by AIG? Probably so.

[Don E.]

You clearly do not understand the gravity of the situation if you think this was a bad move on the government's part. AIG is the company that backs all these failed mortgages. Should AIG fall, countless banks will fall as well. It has been clearly demonstrated that no bank in the United States could survive if AIG falls because no bank in the United States does not use AIG as a backer of its mortgages. So, consider the world wide impact of a majority of banks failing in the US. What would happen?

I am very unhappy about the need to do this and there should be reprecussions for those involved in managing AIG, but its not entirely their fault. As has become obvious, AIG is a monopoly that while it may not be uncompetitive, it is definately too big for the welfare of the United States. In the future, this situation could be alleviated by SEC or FTC oversight of such organizations - and not allowing them to hold such a large share of the market for something that could have such a huge impact on the US economy. Break it up into smaller pieces and should one part fail, its not as catastrophic as this has the potential to be.

[Chris in Texas]

A guy named "Russel" made a good observation on another LA Times blog. Here is his point about AIG.

"According to Barrons.com and WSJ.com, about 87% of AIG's premiums came from overseas foreign customers, principally In Taiwan and Japan in this instance. So, the U.S. Government had to protect their interests, no matter what (the cost). Thus, the Federal government had no real choice. In every instance, recent bailouts have been designed to first protect foreign creditors who threatened to stop buying our bonds if we did not protect their financial interests (Japan, China, Russia, Middle East- United Arab Emirates). So, financially, our politicians are subservient to foreign creditors more and more. "

So just how has the Republican administration made us more secure in the last 8 years? By selling the future of our children to foreign governments?

[Eric]

What's truly going to upset me is when the heads of AIG roll.....out the door with millions of dollars in bonuses...even though they bankrupted the company. Glad I donated my tax dollars for another CEO to retire in the Bahamas.

[rob]

we all like or banks and have let the goverment ,banks and insurance companys run our lives and money its time to take back our lives and start hording cash in our safes and mattresses like grandma or start taking our vote seriously and looking into the people not the party thanks for reading

[Andrew Lee]

I'm an Australian closely watching the unfolding saga of the US financial system, in particular the Federal Reserve's approach to bailing out (or not as the case of Lehmann Brothers) large institutions who have been badly burned by the mortgage stuation and allied credit crisis in the US. From a foreign observers perspective it is quite peverse to see a Government controlled entity like the Fed Reserve hand over billions of dollars of Taxpayers money to private enterprise. In reality the bastion that is Wall Street should have come to the party not the Tax payer. I doubt if this govenment funded bailout would have happened in many other countries where the politicians and their government employees would be chastised if they were to fund recalictrant companies. Surely, it should have been Wall Street and the investors that decide whether AIG or others are worth saving notwithstanding that failure to prop up AIG would have had dire consequences for an already 'Under strain' US Financial system. All I can say is the Fed Reserve should keep a tight reign on the AIG executives charged with fixing the company and disposing of assets in order to repay the $85 Billion handout.

[jb]

Don E - I have no problem with a bailout. I do have a problem with private gains and public losses. You want public losses, fine, figure out a way to tax those companies that gain, NOT the taxpayers.

[John Nehls]

How about bail out the american people. The government will go and bail out the big business, banks, insurers, but wont help the american people, how about lets bail out these rediculous gas prices. How about bail out the ones who cant afford to make their house payments because of the banks that are crying because they can run a business, or better yet how about we bail out the ones who cant afford anything that sleep on the street... Hey Mr. Bush how about we spend 85 billion dollars on homes for the homeless.... People its not the economy, its not the banks, its not the business, its your elected republican president and his administration.

[Rick Starr]

I understand the gravity of the situation and so does George W. Bush.
He knows exactly what he's doing here, he has been trying to bankrupt the American economy since day one and this is just another move in that direction.
Everyone thinks this is the end of our problems but let me tell you something,
with all of our economic problems the American worker always pulled the economy back from the brink of disaster but that isn't going to happen this time.
The Repug's have sent too many jobs over seas and people are hurting and while i'm here let me tell you one other thing and see if this reminds you of anything. Bailing out crooked institutions only encourages the next wave of crooks to do the same thing, it's like erecting a huge neon sign saying, we got away with it, now it's your turn. What this should be reminding you of is the illegal immigration problem, same policy, different circumstance. Throw the Repug's out!

[BambiB]

This is nothing more or less than the ongoing gang-rape of the American taxpayer.

When the colonists threw tea in the harbor, it was over a 3% tax.

Where has the spine (and brain) of the average American gone that the government can now tax us more than 1/3 of our income (tax freedom day is April 23d this year) then turn around and add billions in debt for bailouts for which the taxpayer will see NO benefit whatsoever?

It is time to turn this government around the hard way. Throw the bums out. Stand guard at the border and SHOOT invaders. Hang the criminals in the town square.

What are you going to tell your kids and grandkids when they start out knowing they can never afford to own a home, never retire, never stop working to subsidize government waste, fraud and abuse? Are you going to tell them you went along to get along? Or are you going to be able to tell them you stuck your thumb in the government's eye and told them to piss off?

Here's a news flash: McCain and Obama aren't going to make things any better! The only presidential candidate who had a CLUE about this mess was Ron Paul - and he's been warning about it for YEARS! Now his warnings are coming true and your response is to vote for more of the same? If you're that dumb, you deserve all the evil which will come your way with a vote for Republicrats.

WAKE UP AMERICA! VOTE THIRD PARTY! And if that doesn't work, remember that the purpose of the Second Amendment is so we can overthrow our own government.

If everyone simply refused to pay any more taxes, what would the government do? Shrivel?

GOOD!

[Rick James]

I agree with the above post.

Ron Paul had a great understanding about the situation. I would have voted for him all the way, but it appears that too many Americans are unaware about the gravity of the situations becoming before us.

Anyhow, its already too late to worry about the past... We need to choose a new leader for this country and I believe we all know the answer to that question. This administration doesn't understand how to run a country and we should prevent at any means possible to continue for the next 4 years again.

If McCain becomes president, it is surely because of ignorance and greed.

WAKE UP AMERICA!!!

$85B...there are about 300,000 in the USA so about 200,000 are over 18. That is about $425,000 per person.....after 30% taxes of about $127,500, that leaves about $297,500. What could you do with that?

[Willy D]

Did I here on Night Line Monday Night that George Bush's cousin sits on the board of AIG? What?

[Angela]

George Bush's second cousin is a manager director at Lehman Brothers. Every time some swindle goes down in this country, there's a Bush behind it.