The Fed and the Treasury are once more on the march to save another Titan of Wall Street from crashing down. This time its $85 Billion Dollars to keep Insurance Giant AIG from drowning in its own red ink.
Oh, and the Bush “We don’t do regulation” administration not only pumped in that $85 Billion Dollars (say “$85 Billion Dollars” enough and it really doesn’t seem like all that much, now does it?) but they also swallowed hard and “seized control” of AIG under a law formulated back during the Great Depression (i.e., back when that damn socialist traitor FDR was President and Democrats, curse them, ruled Congress):
Invoking extraordinary powers granted after the 1929 stock market crash, the government seized control of the insurance giant American International Group to preserve a crucial bulwark of the global financial system.
The move to lend the Wall Street giant up to $85 billion in exchange for nearly 80 percent of its stock effectively nationalizes one of the central institutions in the crisis that has swept through markets this month.
The government had sought to avoid federal intervention by lining up private companies to rescue AIG. But the effort failed when companies were unwilling to take on the massive financial risk, forcing the government’s hand.
AIG found itself on the verge of bankruptcy because of mounting losses from investments tied to subprime home mortgages and also from the insurance it was providing to others who invested in mortgages. […]
. . . AIG does business in ways that get to Americans’ pocketbooks. Its short-term debt is held by institutions all over the world, including money-market mutual funds, and its overnight collapse could have caused big losses in those funds, perhaps even risking a run on them.
One question for all the financial geniuses out there. Where does our beloved “in debt to Communist China up to its eyeballs” federal government keep finding these Billions of Dollars to bail out Bear Stearns, Fannie and Freddie, and now AIG? Could it be the Federal Reserve and the Treasury are just printing “mo money” from their magical printing press of wonderment? Or is there anyone (like say, the central banks of certain foreign governments) still willing to buy Billions of Dollars of T-Bills because they don’t like the smell of Wall Street panic in the morning?
Just asking. Because obviously the AIG bailout plan had a lot to do with the reaction of foreign investors both those with money in our in our markets and those with their funds in markets overseas. So far, the result of the Fed’s “rescue” of AIG has been decidedly mixed:
PARIS — European stocks opened higher Wednesday in response to the Federal Reserve Board’s rescue of the insurer American International Group, but an early rally in Asia lost steam in late trading on concerns about the U.S. financial system and China’s economy.
And now some special questions for John McCain today:
1. Dear Senator McCain, are the US economic “fundamentals” still strong?
2. And do you still think making the Bush tax cuts permanent along with even more corporate tax breaks will solve all our economic woes?
3. And for a man, who admittedly doesn’t know much about the economy, how would you know?
4. Oh, and that financial industry regulation thing — are you and your good buddy Phil Gramm still against it, or are you ready to flip flop on that?
Oh wait, I see we already have the answer to our last question:
A decade ago, Sen. John McCain embraced legislation to broadly deregulate the banking and insurance industries, helping to sweep aside a thicket of rules established over decades in favor of a less restricted financial marketplace that proponents said would result in greater economic growth.
Now, as the Bush administration scrambles to prevent the collapse of the American International Group (AIG), the nation’s largest insurance company, and stabilize a tumultuous Wall Street, the Republican presidential nominee is scrambling to recast himself as a champion of regulation to end “reckless conduct, corruption and unbridled greed” on Wall Street.
“Government has a clear responsibility to act in defense of the public interest, and that’s exactly what I intend to do,” a fiery McCain said at a rally in Tampa yesterday. “In my administration, we’re going to hold people on Wall Street responsible. And we’re going to enact and enforce reforms to make sure that these outrages never happen in the first place.”
Gosh Johnny Mac, I’d sure like to believe you about all this devotion to regulation and government oversight, blah, blah, blah. But with all the lies you’ve been telling lately, I have to ask myself just how seriously devoted to oversight of, and accountability for, Wall Street banking, security and insurance firms, you really are? Especially considering your past history of doing whatever your lobbyist friends wanted:
In 2002, McCain introduced a bill to deregulate the broadband Internet market, warning that “the potential for government interference with market forces is not limited to federal regulation.” Three years earlier, McCain had joined with other Republicans to push through landmark legislation sponsored by then-Sen. Phil Gramm (Tex.), who is now an economic adviser to his campaign. The Gramm-Leach-Bliley Act aimed to make the country’s financial institutions competitive by removing the Depression-era walls between banking, investment and insurance companies.
That bill allowed AIG to participate in the gold rush of a rapidly expanding global banking and investment market. But the legislation also helped pave the way for companies such as AIG and Lehman Brothers to become behemoths laden with bad loans and investments.
Naturally, like any good Republican does, you don’t blame yourself for the results of your embrace of the de-regulation your Wall Street and Banking “friends” were so desperate to receive. That wouldn’t be good right wing, conservative behavior after all. No, you lay the blame squarely at the feet of –well — of the government regulators you neutered!
He said the misconduct [of AIG and other Wall Street executives] was aided by “casual oversight by regulatory agencies in Washington,” where he said oversight is “scattered, unfocused and ineffective.”
“They haven’t been doing their job right,” McCain said yesterday, “or else we wouldn’t have these massive problems on Wall Street, and that’s a fact. At their worst, they’ve been caught up in Washington turf wars instead of working together to protect investors and the public interest.”
Don’t you just love it. A Republican candidate for president, who voted to take away the ability of government regulators to do their jobs effectively (or in this case, to do anything at all), then turns around when the industry he helped de-regulate goes in the toilet, in large part to the deregulation he supported, and blames those very same federal regulators for all the problems that resulted! See, it was Big Government’s fault back when they did regulate and it’s still Big Government’s fault when they can no longer regulate. In other words, whatever the problem, it’s always Big Government’s fault! Now that’s sure straight talk we can rely upon!
I imagine, Senator McCain, that you will continue to claim you are the only true “change” candidate, the only true “reformer” and the only certified “maverick” in this race. The only man who has gone against his party for the good of the country rather than for the good of corporate lobbyists and their masters. But the truth is that you were, and are, as bought and paid for a politician as any in Washington, with a long history of doing questionable and unethical favors for wealthy “friends” and voting a straight Republican party line in the Senate whenever it mattered most.
And now for one last question Senator McCain (really, I promise, it’s my last one):
5. Based on all of the above why should we believe that you are anything but a self-serving self-promoter and bullshit artist?
I humbly ask that with all due respect, and of course, deference for your esteemed position as an “American Hero” and dedicated “Public Servant.” Hey, it’s the least I could do.