Between the $29 billion the Fed pledged to swing the Bear Stearns sale to JPMorgan in March, $100 billion apiece to rescue mortgage finance firms Fannie Mae and Freddie Mac, up to $300 billion for the Federal Housing Authority, Tuesday's $85 billion loan to insurer AIG and various other rescue deals and loans, taxpayers are potentially on the hook for more than $900 billion.
After saying no to Lehman brothers, The Feds said yes to AIG because of concerns that its collapse would harm thousands of companies around the world and cause chaos in the $62 trillion market for credit default swaps, where it is a big player. To be sure, the Fed attached quite a few strings to its AIG funding deal. The loan carries a high interest rate, the government can veto any dividends, and AIG is expected to sell assets over the next two years to repay its debt. Senior management will be replaced.
Does it not make you wonder what the criteria is however? Many friends have aptly criticized, that our student loans are killing us please bail us out; or my mortgage is through the roof please bail me out. Why AIG, why not Lehman brothers, why Bear Stearns and most importantly why not the average consumer who suffers personal financial ruin? Why? Why? Why? These companies pillage the consumer, make money off our money and then when they screw up we bail them out. There is something seriously wrong with the system (read what the Federal Reserve is it will scare you), but of course like everything else going on in America the government steps aside and allows corporations to control everything. That is what should end in America more than anything else, the control of corporations over our government. A new campaign slogan - people over corporations.