Stocks Fall After A-I-G Rescue
Stocks Fall After A-I-G Rescue Save Email Print
Posted: 3:21 PM Sep 17, 2008
Last Updated: 3:21 PM Sep 17, 2008
Reporter: Linsey Davis

A | A | A

Another day-- another billion-dollar bailout.

This time, Uncle Sam is riding to the rescue of the nation's largest insurer, A-I-G.

The potential exposure to the government -- a whopping 85 billion taxpayer dollars.

Another lansdslide on Wall Street--down more than 215 points in opening minutes, only hours after many thought the dust had settled with the federal government's bailout of AIG--two days after the Treasury Secretary announced they didn't want to be in the bailout business.

"This is a watershed moment, a history making moment in financial SVCS. No one knows what end result will look like", said Heidi Moore of the Wall Street Journal.

In the short term, it looks like investors are still anxious, even after the government's 85-billion-dollar loan of taxpayer dollars to the country's largest insurance company in exchange for 80% stake in AIG.

The company has 116-thousand employees, 74 million customers, and a trillion dollars in assets.

"This is a loan. Interest is going to be paid. It's not a question of solvency of the company. The company is not insolvent; it has a cash deficit at the moment. It's a very healthy company", said Hank Greenberg, former AIG CEO.

People like Doctor Ed Diamond are breathing much easier about his AIG Life insurance policy.

"When I heard the news, I obviously felt quite concerned quite bad about the fact that money we're been putting away for years could possibly disappear", sais Dr. Ed Diamond who owns a AIG Life insurance policy.

AIG not the only company on the negotiation table. Last night, british bank Barclays agreed to buy a portion of Lehman Brothers for the bargain price of 2 billion dollars.

Today, the treasury announced that, to pay for the loans to Wall Street firms, it is going to borrow money by selling a special series of treasury bills. The Government is doing this to keep its own books in order.

Some economic analysts say A-I-G has been on a rocky path for some time.

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