TEXT OF STORY
Scott Jagow: The insurance company AIG was considered too big to fail, remember? That’s why the Fed loaned it a ton of money in September. Apparently, it wasn’t enough. This morning, the government announced a second rescue package. Some of it is just restructuring the loans, but the Treasury’s also buying a stake in AIG this time. Marketplace’s Jeremy Hobson has more on that.
Jeremy Hobson: The government will lower the interest rate on the loan it made to AIG and give the insurer more time to pay it back. Uncle Sam will also help AIG take billions of dollars worth of debt off its balance sheet.
Donn Vickrey of Gradient Analytics has been looking over AIG’s earnings report this morning.
Donn Vickrey: If you believe their reported results, they are not nearly as bad as I would have expected to justify the funding that they got from the government.
Even so, the government will buy preferred stock to the tune of $40 billion, making the entire AIG bailout worth a whopping $150 billion. Some of that money will come from the Troubled Asset Relief Program or TARP, marking the first time TARP money has been used to aid a company other than a bank.
Still, White House spokesman Tony Fratto tells Marketplace this move doesn’t open the door to TARP money being used to rescue the auto industry, because he says much of AIG’s business is clearly within the financial sector.
In New York, I’m Jeremy Hobson for Marketplace.
We’re here to help you navigate this changed world and economy.
Our mission at Marketplace is to raise the economic intelligence of the country. It’s a tough task, but it’s never been more important.
In the past year, we’ve seen record unemployment, stimulus bills, and reddit users influencing the stock market. Marketplace helps you understand it all, will fact-based, approachable, and unbiased reporting.
Generous support from listeners and readers is what powers our nonprofit news—and your donation today will help provide this essential service. For just $5/month, you can sustain independent journalism that keeps you and thousands of others informed.