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March 02, 2009


Eric Salzman for the Fed!



March 2, 2009

WASHINGTON - The following is a joint statement was issued on Monday the Treasury and the Federal Reserve on American liquidation Group:

The U.S. Treasury Department and the Federal Reserve Board today announced yet another restructuring of the government's assistance to AIG in order to cover this intergalactic financial blackhole in a manner that yet again extorts the helpless US taxpayer. Specifically, the government's restructuring is designed to prop up this failed sorry excuse of a company while facilitating the orderly completion of the AIG global garage sale.

The company continues to face significant challenges, primarily driven by the rapid deterioration in the financial markets largely caused by its own reckless stupidity and the continued turbulence in the markets also caused by its own reckless stupidity. The additional resources will help stabilize the company until its next quarterly TARP fix, and in doing so further destabilizing the already destabilized financial system.

As significantly, the restructuring components of the government's assistance begin to separate the dogfood lines of AIG, as well as unravel the twisted opaque intestinal blockage constituting the company's finances. The long long long long-term solution for the company, its fleeing customers, the fleeced U.S. taxpayer, and the discombobulated global financial system is the rapid recombobulation and capitalist re-education of the firm. This will take a long long long long time and quite probably more and more and more government support, since markets are not going to stabilize or improve in the near near near term.

Given the doomsday risk AIG continues to pose and the fragility of markets today, the potential cost to the economy and the taxpayer of government action will be extremely higher than government inaction. AIG provides insurance protection to more than 100,000 entities (god save their souls), including fledgling small businesses, insolvent municipalities, 401(cents) plans, and Fortune 50 cent companies who together employ over 100 million furious Americans. AIG has over 30 million policyholders in the U.S. and is a major source of layoff insurance for, among others, underpaid teachers and Madoff fleeced non-profit organizations (god save all of them). Most importantly the company also is a significant counterparty to Goldman Sachs, Goldman Sachs, a number of major European financial institutions as well as Goldman Sachs.

AIG operates in over 130 countries with over 400 dimwitted regulators and the company and its juggernaut of regulated and unregulated subsidiaries are subject to a plethora of impotent resolution frameworks across their broad and diverse operations without a single viable resolution mechanism. Within the few options available, the restructuring plan offers a multi-part approach which we hope and pray every night brings forward the ultimate resolution of the company, has received feeble acquiesence from key stakeholders and the seal of approval of the useless rating agencies that helped create this fiasco, and hopefully provides the possible protection for taxpayers in connection with this commitment of resources at this moment in time.

The steps announced today provide tangible evidence of the U.S. government's commitment to the baiout of AIG time and time again in the face of the certainty of further market dislocations and economic deterioration. Orderly restructuring is essential to AIG's repayment of the ransom it has received from U.S. taxpayers and to hopefully preserving financial stability. The U.S. government is committed to continuing to bail AIG to maintain its ability to generate more and more obligations as they come due.

Treasury has stated that public ownership of financial institutions is not a policy goal but a reality and, to the extent public ownership is an outcome of Treasury actions, as it has been with AIG, it will work to privatise government owned enterprises with those from the private sector to create a more business for unemployed bankers as soon as possible.

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