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German and French banks got $36 billion from AIG Bailout - story BURIED



March 16, 2009 – Comments (5) | RELATED TICKERS: AIG , BAC , DB

Amazing how I see in one night, the top headline that had the potential to wake America up to later become buried by a flurry of almost-nonsense news by mainstream media on AIG.

Here is the real news from Michael Mandel from BusinessWeek: German and French banks got $36 billion from AIG Bailout

Read it.  Amazing how the MAJORITY of the bailout money from AIG payouts went to FOREIGN institutions! Of the $100 billion, $58 billion went outside of the U.S.

Do you understand the implications of this?

Link to the article.  It's a shame to see this go from top headline on google news, then see it be buried by AIG bonus stories with 'US should be outraged over AIG bonuses' claims, and then to be gone.

I'm curious about your thoughts & comments, either post/comment here or on the BusinessWeek site. 

Is this worth Rec'ing?

5 Comments – Post Your Own

#1) On March 16, 2009 at 5:33 AM, AnomaLee (28.80) wrote:

I'm not surprised considering that most CDS are with foreign institutions.

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#2) On March 16, 2009 at 7:06 AM, BenGriffin71 (27.61) wrote:

You prefer protectionism?

It would be an extrememly protectionist and internationally inflamatory move for the US to step in with funds but then say the only legitimate debts are those from institutions domociled inside the US.

 They probably should have let AIG go bankrupt and then bailed out any who were unpaid in only the regulated insurance businesses.  I really don't know enough of the specifics, to make that assesment though.  If that had been the chosen path, there would likely still have been foreign holders of regulated insurance products..... who rightfully deserve to be paid.

 You either bail them out, or you don't, but it is a big mistake to say you will only bail someone out if they are of the correct nationality, or creed, or color, or religion or other social grouping.

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#3) On March 16, 2009 at 8:41 AM, rd80 (94.37) wrote:

I don't understand why anyone is surprised that a lot of the money ended up in foreign banks.

AIG (the "I" stands for International) got in trouble largely because the CDS they wrote performed much worse than they anticipated and they had more claims against those contracts than they could pay.

Why would anyone expect the counterparties to those CDS were all, or even predominantly, US firms? 

Congress, the Treasury and the Fed should all have been well aware of who the counterparties were before they stepped in to bail out AIG.  If they didn't, they were incompetent and negligent.

Business journalists may not have known the details of the counterparty list, but they should have had a rough idea of who had claims against AIG.  IMHO, publishing 'taxpayers bailing out foreign banks' articles now is equivalent to journalists acknowleging they did a poor job of covering the bailout story last year.

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#4) On March 16, 2009 at 2:30 PM, portefeuille (98.45) wrote:

The French banks are not owned by the French, the German banks are not owned by the Germans.

An example:

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#5) On March 16, 2009 at 3:11 PM, portefeuille (98.45) wrote:

(even if they were, that should not keep AIG from "honoring their contractual obligations")

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