Hey, Where Is All That Money REALLY Coming From & Which Americans Are Paying For It?

Filed Under Federal Reserve, Lenders With Problems 2008, Todays Economy
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The Federal Reserve Board on Tuesday, with the full support of the Treasury Department, authorized the Federal Reserve Bank of New York to lend up to $85 billion to the American International Group (AIG) under section 13(3) of the Federal Reserve Act. The secured loan has terms and conditions designed to protect the interests of the U.S. government and taxpayers.

The Board determined that, in current circumstances, a disorderly failure of AIG could add to already significant levels of financial market fragility and lead to substantially higher borrowing costs, reduced household wealth, and materially weaker economic performance.

I thought I heard Treasury Secretary Henry Paulson say that there would be no more support from the government, (meaning you and I) yesterday??? By the way how much will this cost me?

The purpose of this liquidity facility is to assist AIG in meeting its obligations as they come due. This loan will facilitate a process under which AIG will sell certain of its businesses in an orderly manner, with the least possible disruption to the overall economy.

The AIG facility has a 24-month term. Interest will accrue on the outstanding balance at a rate of three-month Libor plus 850 basis points. AIG will be permitted to draw up to $85 billion under the facility.

The interests of taxpayers are protected by key terms of the loan (So where are they getting the money from?). The loan is collateralized by all the assets of AIG, and of its primary non-regulated subsidiaries. These assets include the stock of substantially all of the regulated subsidiaries. The loan is expected to be repaid from the proceeds of the sale of the firm’s assets. The U.S. government will receive a 79.9 percent equity interest in AIG and has the right to veto the payment of dividends to common and preferred shareholders.

We the American Public will be paying, the middle class. Without regulation what is to say they will not do it again. Our company buys defaulted second mortgages that usually the first mortgage was done at the same time. The loans that were approved at 100% just amazes me. $1,000,000 loans that the buyer works at a car wash. Yes a car wash. Not manager or general manager an employee. A customer that is not an American citizen and has never had a job buys an $800,000 property, a vegetable picker buys a $300,000 property , a cashier at grocery store 400,000 property. Keep in mind the sale price is the loan amount. We present a case on each loan that is foreclosed by the first to get approval to zero it out. I always input the place of employment because it just blows my mind. You know that these people cannot possibly afford the loans and most default on the first payment. When they agree to insure the loans is it based on “trust” they just take the lenders word??? If that is the case shame on them for being so stupid.
I could go on forever with the things that I have seen. I have very little sympathy for these companies.

Thanks

Barbra Orr

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