Cato: Bridge Loan for AIG
In Why Bailouts Scare Stocks, Cato's Alan Reynolds writes: "It's probably true that 'something had to be done' in the case of AIG, the nation's largest insurance company with operations in 130-plus countries. But doing something could have meant doing something else - such as offering a secured bridge loan while AIG engaged in some orderly asset sales."
Well, that seems like the responsible thing to do.
Comments (3)
John Reed
I believe a bridge loan is close to what AIG got; although AIG refers to the agreement as "a two year secured revolving credit facility for $85 billion." Or perhaps a line of credit would be a more accurate description.
Published: September 19, 2008 1:01 PM
Bill Stearns
Apparently there is more to the deal then has been publicly released. The word on the street today was AIG is going to ramp up asset sales to pay-off the loan and that this will somehow forestall the Fed's 80% equity takeover. If that works, it'd be pretty shrewd.
Published: September 19, 2008 3:18 PM
Alan Reynolds
Some big AIG stockholders like Legg Mason and Hank Greenberg are saying "thanks but no thanks" to this 79.9% expropriation negotiated without their approval. Where in the Constitution does it say the government has the authority to seize most of a trillion dollar firm in exchange for a little token loan (plus 11.3% interest)? And how did Elliot Spitzer get away with firing Hank Greenberg a while back? A bunch of thugs.
Published: September 23, 2008 9:01 AM