The reason that taxpayers have had to prop up AIG to the tune of $173 billion is that AIG is now basically a conduit—it owes money to so many other companies that the cash just pours right through. If AIG doesn't pay its counterparties—the entities on other end of its bad bets on the subprime mortgage market, the counterparties might go belly-up, too. That's why the bailout of AIG is sometimes referred to as a "backdoor bailout" for other companies. The people and companies on the receiving end of the "backdoor bailout" are AIG's counterparties, and so far, the Treasury and the Fed have been keeping their names secret. Now the Project on Government Oversight (POGO) is trying to change that.
Wednesday, March 25, 2009
AIG Is A Nightmare In Our Economic Recovery
Mother Jones does a pretty good job of explaining some of the complexities of the AIG bailout - and why the government is probably not done with this job. Click the link to read more.