I'll be strong for half that amount. Maybe even less.

Oh hell, I'll be reasonably reliable for a decent dinner with cocktails.

This is too freaking funny.

I will miss the AIG commercials they ran during sporting events though.

@Smitros: I could be that strong for two-fifths that amount.

Hmmmn, so a company on the verge of bankruptcy doesn't pull their (vanity)commercials as a cost savings measure? No, no reason to tighten our belts, the government will bail us out.

I wonder if all the past interest rate cuts was the current administration's desperate attempt to stave off our country's economic collapse till after the election.

I'm sure they assume they will win (steal *cough*) the election, but even if they didn't, my guess is they were hoping to defer the collapse until a Democratic President was in office. Nothing like dumping your mess on someone else's doorstep.

I'd really love to see this "bail out" reported as what it is for a change, it's a "loan". Loan being something that is payed back, in this case 2 years. Consumerist, get at least the bare bones basics right in you stories.

Part of the conditions of the "loan" is that the "government" now "owns" 80% of AIG.

Is this a backdoor way to nationalize AIG, technically it now is. What is next?

That smoke you see on the horizon is the printing presses making more dollars (therefore decreasing the value of our current dollar)s to pay for all these "rescues" of the "too big to fail" group.

@SkokieGuy: Let's keep it on topic. Making partisan comments is only inviting commentary along those lines, which has little to nothing to do with the posting.

@full.tang.halo: If you want to criticize editorial choices, the best way is to email the editor. Nonetheless, you need to do so civilly - being snarky about it is not called for. Don't do this again.

@full.tang.halo: If it's such a great idea to loan a company on the verge of bankruptcy 85 billion dollars, why didn't anyone else in the private market want to do that?

@full.tang.halo: In their previous story, which went into details, they disclosed it was a loan. This is an article laughing at the commercial.

@shoelace414: because they can't (legally) just decide to print more money and devalue the dollar more. Plus, it seems most are in trouble themselves so didn't have it anyway.

@shoelace414: Because the private market is a fan of secured loans, not "we'll pay you back if we're still around and can't renegotiate" loans. Sure, AIG does have some assets that they will sell off to pay back a portion of the loan, but I think most taxpayers are under the impression that they will be at least partially responsible for the inevitable loss.

Sad times, but at least we have ironic commercials to keep us entertained.

I am in the insurance biz, albeit in a niche area.

Editorial choices aside, full.tang.halo is making a correct factual assertion that is necessary for a consumer to have an educated, intelligent understanding of AIG.

AIG is a HUGE company with many product/business lines - auto insurance, life/annuity, pensions, aviation leasing, commercial property-casualty, MPL and so forth. A financial collapse of AIG would have far-reaching effects - for example it could wipe out pensions for millions of people. At root, AIG's core business lines is "business as usual," with adequate capital to cover policy exposures.

As a result of the LOAN, to use the correct terminoligy, we consumers are being protected from a shattering loss of value in pensions, annuities and other income and retirement-driving vehicles that millions of people depend on. As protection, this loan must be paid off within 24 months. In addition, the Feds as collateral own 80% of AIG for the duration. What that means is that for every dollar of profit every single day - and remember we are talking about a huge entity with core profitability - the feds take 80 cents of each dollar.

Sure, the commercials are now ironic and that makes a nice story. But it's worthwhile - and good consumer protection - to gain an understanding of the actual implications of the loan as well. As taxpayers, we would be FAR worse off if AIG and other core-stable entities began to crumble.

I was just making the same comment to my friends. I keep giggling.

It's cute to put those kids in the commercials, AIG, but it wasn't so cute to let them run the company.

I wonder if any golden chute or exec pay cuts were strings on this loan. I say loan because thats what it is till they go belly up and then it will be considered
another richmans bailout.

I love this site and largely, enjoy the commenters' dialogue so I'll keep this civil. Everyone has their own (and often mistaken) opinion which is generally intended to be inflamatory. That's what gets page views in the media, no? So I'll keep my opinions to myself and leave this quote from an article in the WSJ:

"The loan is secured by AIG's assets, including its profitable insurance businesses, giving the Fed some protection even if markets continue to sink. And if AIG rebounds, taxpayers could reap a big profit through the government's equity stake."

$75B in terms of a TRILLION ($1,000,000,000,000) dollar company is hardly a risk to 'tax-payer' money.

Sho'Nuff - R.I.P

@LiuHaoZhong: Except that we are going to lose that money.

Seriously, how do we all stand up and say we don't want to use our money for a business that should and will fail? Withhold all of our taxes this year?

@SkokieGuy: My guess is that they wouldn't save any money by pulling contracted commercials at this late date. Mind you, I also suspect that that wasn't the main thing on the company's mind yesterday.

Regardless of the cause, it's still pretty funny. Bet that baby's not laughing now.

@loquaciousmusic: I guess baby Ethan was in charge of secure disposal of sensitve documents.

I like this ad better:

It's not a better ad; it doesn't say anything about what AIG does or why it's better than the alternatives but there is a laughing baby.

@sethom: There is virtually no chance of AIG defaulting on the loan. All it did was allow AIG to not be forced into selling their assets at fire-sale prices. They can take their time and get the maximum price the market will bear.

AND in the very worst case scenario, the company is broken up, sold off and the gov't is the first in line to get paid.

@LiuHaoZhong: The devil is in the details, darling. Ask your parents. These deals always turn out to be a loser for Uncle Sam.

Reason 1: The government lawyers are outgunned.

Reason 2: The government is it own worst client in this case and has a conflict of interest. It's trying to help AIG and therefore is not on Joe Taxpayer's side.

Reason 3: Even if there is a government lawyer that objects to a particular part of the agreement, he or she will be ignored or shuffled off somewhere else. The name of the game is expediency and politics.

Reason 4: Don't believe everything you read. How do you know it's a good deal? Well, the government told you so. Did you expect the government to say: Guess what? You got shafted!

Reason 5: No private company would touch this deal. The government tried, begged and pleaded. You think the government is better and smarter than companies like Goldman Sachs? Not a chance.

@sethom: Speak for yourself. I'm part of the "we" that wants to see giant companies like this remain standing so they can; pay taxes, repay thier debts, employee thousands of Americans, and provide valuable services. Companies need to borrow money all the time, when its a number this large sometimes government is the only viable lender. Would you rather have AIG borrow from another government?

That's what I don't get. For ease of the brain, let's divide all the numbers by a million. So $1T => $1M. $75B => $75,000.

So if I have a million dollars worth of assets in my company, I sell 80% stake in it, because I need $75,000 overnight?

Something here makes no freakin' sense.

@crabbyman6: In fact this is what many of these banks do. They have a legal license to create money in the form of credit. This is done through the mechanism of fractional reserve lending. A bank need have only 10% in reserve for the amount of a loan it makes. So for example, only $10,000 in actual reserves to make a loan of $100,000. The inflation in the housing market led to a great deal of money being created in this way, devaluing our currency, especially since it was not being put into anything productive, but rather just fueling a speculative boom. These institutions are now crashing because they're the last ones holding the tab on homes that people cannot afford to pay. But make no mistake about it, that money that was created is out there, even though it never rolled off a printing press.

Wikipedia has brief summary of the purpose of fractional reserve lending which describes that it in fact does give banks the ability to create money. The Wikipedia article links to a 71 page PDF document published by the Federal Reserve that states this as well and is recommended reading for those interested in how private concerns not subject to democratic controls can wreak havoc on our economy:

[en.wikipedia.org]

So if the government owns the company, and the people (theoretically) own the government, should I expect to receive a dividend check?

This is all remarkably Socialist, not that I personally have a problem with that. I just want to see some ROI on my tax dollars.

@savvy999: That's because its not a trillion dollar company. It's a "trillion" dollar company.

@HIV 2 Elway Resurrected: When companies make bets like it's Vegas, i.e. housing, hedging, etc. It's hard to choke down that our deficit is getting bigger while the government is spending taxpayer money on crap like this. No offense, I'm a big business guy myself, but I would rather see a free market situation and let everything settle.

See the parents didn't listen and now the kids have to pay for everything.

Was'nt buying on a 10% margin what caused the stockmarket crash in the 20s and led to the great depresion. Also how much of AIGs assets are tangiable.

@twophrasebark: Oh man, my parents? Because i'm obv 12 years old? I'm not sure i follow. Or maybe I'm just sensitive.

My big "schtick" is that everyone is kicking and screaming about the "tax-payers money" being at risk or lost. What happens when AIG stops paying its 20,000 employees and they, in turn, stop paying income taxes? How much money is lost then, not only today, but in years to come?

Also, this is not a lawyers duel. And i know this is a good deal because I, and 100,000 other people, still have jobs. The problem with AIG was in managing its own money. It still generates $100 billion in revenue a year, so $75 billion, over two years and in combination with liquidating some of its assets, shouldn't be a problem.

This type of commercial must have some affect on people or they wouldn't run it.The advertising agency probably has some obscure survey saying this will work.It is creepy though that people are influenced by this crap.Hopefully they aren't in charge of too much money.

Yea, turns out those kids didn't know shit about investing.

Concerned that AIG assets will be handed off for a steal to whichever lobbyist contributed the most to the Presidential campaign?
One more reason to ensure that when the next occupant of the Oval Office moves in, make sure he's the candidate who's transition chief (and campaign staff, and major contributors) aren't all major lobbyists. While Washington is a pretty corrupting place - especially for someone that's held office there for over two decades - it's the surest viable plan to protect taxpayers' investment. Or alternately, one has a history of working to empower people over corporations, S&Ls and now-disgraced corrupt Washington insiders.
Nonpartisan, of course: I'd argue that either party fielding a candidate that's less beholden to lobbyists, fat cats and earmarks would be the one to trust to close this sordid affair out in a beneficial way. So long as they, y'know, knows something about Economics.

And, guys, FWIW, these media buys are contracted for way ahead of time and once committed to, are difficult to back out of. Still funny, though.

@sethom: I sympathize as I am a rampant free-marketeer myself, but in this case the effect of AIG going down would have been systemic, in that the lack of insurance would have completely sunk the global credit markets - possibly even beyond repair.

@LiuHaoZhong: Make no mistake, the bailout was NOT to protect your job or that of your 100,000 co-workers. It was to make sure bankers kept the money carousel spinning. Ask the saps at Lehmans whether the government could spare a tissue for their tears.

It seems there was a mix up at HR. Instead of hiring the kids just for the commercial they also hired them to run their risk assessment division.

@ekthesy: Actually, in a way, yes. If AIG turns a profit and is prepared to pay its shareholders a dividend, then the government would receive ~ 80% of that total dividend payment.

Then, they would apply the money to the US Government's "general fund", which would most assuredly be a tiny drop in the bucket compared to our debt.

So the net effect would be that our collective debt would be reduced by a miniscule amount, and some politician would then cut our taxes by tenfold the net savings in order to get votes. And I'm trying very hard to not be partisan - the "some politician" is likely to be a member of either party ;-).

Only in America! I love it!

The question is, who is going to want to continue to do business with AIG? Sure the government can keep them alive longer, but whats the point? Doing business with AIG is like keeping a million dollars in one account in a bank John McCain's son just resigned form. You know it's going to fail.

@savvy999: It really doesn't. I agree.

Let's put it this way then. Some people are making the argument that maybe the company doesn't even have that (symbolic) $1 million asset to begin with, but are trying to value the whole package for (symbolic) $1 million.

@LiuHaoZhong: All I'll say is this, wait until you lose your job under a similar situation. Then come back to the Consumerist and seriously defend your current position with a straight face. Be sure to continue berating others who have been through the same position as you earlier.

Because I'm absolutely certain that your tax dollars being used to support your company, but conveniently leaving you and your colleagues in the dust to die will not sit well with you either, unless you are a masochist.

Just because there's a herd mentality, doesn't always mean that there's something wrong with the rationale behind the herd.

@shoegazer:

you're a "rampant free-marketeer" who supports the bailout? no sir, you're confused. you're a fair weather capitalist/rainy day socialist.

Sigh. It remains true. No matter, right or wrong, arguing on the internet is "sofa king wee Todd it"

I bet they're sorry they gave John Bell in Texas a rate that saved him $1500.00 over Allstate/State Farm, Farmers, or Geico, each of which is feeling left out of the "Taxpayer's Sweepstakes" where every corp. is a winner!!!!!1!!!1!!

@veterandem: Allstate, State Farm, I had colds and cold medicine

@the-perfect-face-for-radio: let's just say that I understand the consequences of allowing AIG to default on its insurance commitments to be far worse than the alternative. Fair weather socialist? Not really, I am a realist who is worried about capitalism committing suicide.

so•cial•ism (sō'shə-lĭz'əm) Pronunciation Key
n.
1. Any of various theories or systems of social organization in which the means of producing and distributing goods is owned collectively or by a centralized government that often plans and controls the economy.
2. The stage in Marxist-Leninist theory intermediate between capitalism and communism, in which collective ownership of the economy under the dictatorship of the proletariat has not yet been successfully achieved.

That is all.

@SkokieGuy: sorry, can't buy this blaming of the current administration. probably 90+% of the stuff wrong in this country (especially financially) is the fault of Congress - not this administration, the last one, or even the one before that. But Congress gets off free as a bird b/c they aren't the ones in the limelight (who watches CSPAN regularly to see their shenanigans?). They can easily point to the WH as the scapegoat - or as the savior - whatever fits the moment.

@sethom: That's a good question. And the ultimate answer is that we have to STOP allowing the federal govt to take our money at will. Remember the "right to own and bear arms" thing?? Citizens have to make it know to their reps that this is NOT acceptable and if they allow it they are going to be replaced during the next election. This is why people should NEVER vote for a new tax - no tax is ever temporary and they always grow once they are on the books. If they weren't taking our money, then they couldn't waste it. This just shows that what we are giving them is way MORE than it should be.

@RamV10: what is your point?