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Pastimes : Discussion Thread -- Ignore unavailable to you. Want to Upgrade?

To: c.hinton who wrote (1929)	9/17/2008 10:25:21 AM
From: TimF	Read Replies (1) \| Respond to of 3816

I'm not so sure I like this action. OTOH its a loan, and its not free, they get about 80% of the company, so it isn't a total bail out/give away. But then I don't really want the Feds owning all these companies either. I would hope they would sell the stake. Perhaps a small amount in the not to distant future, and then more as the some of the problems with valuing AIGs assets clear. They may even make a profit from this, but that's sort of like the feds acting as a hedge fund. One problem with rescuing the "to big to fail" firms is that it gives an incentive for firms to become "to big to fail", likely increasing the headaches next time around. OTOH since AIG's owners are taking a hit from this, maybe that incentive is reduced. A pure bailout, a discount loan with no cost, or something like that would increase the moral hazard of this action by a lot.