September 16th, 2008
09:18 PM ET

Evening Buzz: An $85 Billion Rescue

Maureen Miller
AC360° Writer

Tonight, there's another shock to the U.S. markets. We're awaiting a news conference on a deal to save the nation's largest insurance company, American International Group. The federal government is giving AIG an $85 billion loan that gives the Federal Reserve a nearly 80% equity interest in the company.  The move will help AIG avoid bankruptcy.

If you're keeping track (and I know this is complicated) the Federal Reserve opted not to help Lehman Brothers avoid bankrupty yesterday. So, why would it help AIG? We'll break it down for you tonight. Though, here's a hint why: AIG has $1.1 trillion in assets and 74 million clients in 130 countries, along with 116,000 employees worldwide.

Tonight, we'll also talk with personal financial expert Suze Orman about how this could impact your bank account. She'll offer some advice.

We're also on the trail with Senators John McCain and Barack Obama. Hear what they said today about the Wall Street crisis.

And, we'd love to know what you think: Should the federal government be helping companies like AIG avoid catastrophic failure?

Join us tonight at 10pm ET for the breaking developments.

Filed under: Maureen Miller • The Buzz
soundoff (42 Responses)
  1. Carmen, Chicago

    If AIG needs a bail out, then its high time for the regular Joe to start taking money out...things aren't going to get worse they are going to bleed us to death!

    September 16, 2008 at 11:24 pm |
  2. Melissa, Los Angeles

    I'm absolutely furious that my tax dollars are being used for another bailout. With an almost 80% ownership am I going to see a pay out if AIG is turned around? I highly doubt it with the amount of debt we're in. Why is it that responsible people must pay for the irresponsibility of others? If I had known the government was going to bail people out – I would've bought myself one of those no money down houses!

    September 16, 2008 at 11:23 pm |
  3. Kono

    Why is John McCain taking Federal campaign funds when he is preaching cutting government spending? He is taking the worst earmark of all. Seems hypocritical.

    September 16, 2008 at 11:22 pm |
  4. Linda Kelly

    Why do we, (USA) allow companies to get so large . . . larger than the economies of some countries? Is this in our best interests in the future?

    September 16, 2008 at 11:22 pm |
  5. Brandi Volpe

    What happens to the board of directors, CEOs, and CFOs of AIG, Fannie Mae, and Freddie Mac? Does management still receive compensation?

    September 16, 2008 at 11:21 pm |
  6. Brenda Stone

    If our country is in a serious economic decline, how could Sen. Obama raise $66 million dollars just recently? That puzzles me!!

    September 16, 2008 at 11:19 pm |
  7. JC-Los Angeles

    With a father in retirement who ethically worked for AIG throughout his career and with his pension and retirement based upon the company's success, it's about time someone held corrupt, highly paid, worthless, poor decision making executives liable.

    We passed the Sarbanes Oxley legislation to hold corporate executives accountable for their financial reporting; how are writedowns, restatements and fraud not violations? Has any executive been held accountable?

    The only way to stop this continued pattern of malfeasance is to go after executives, take their homes, their portfolios, remove their children from private schools, repossess their fleet of cars and eliminate their country club memberships; it's a start.

    September 16, 2008 at 11:15 pm |
  8. Brock

    I just don't understand if the united states is 500 billion dollars in debt...why would they think it's ok to let someone borrow money they don't have.

    September 16, 2008 at 10:50 pm |
  9. Jackie T. in Memphis

    I don't understand why the Fed waited until today to bail out AIG. At an additional cost of 60 billion dollars for 4 days of procratinating...you do the math. I think the Feds knew all along that they would have to come to the resucue which begs the question, "what did they have to gain by waiting?" I'm afraid to look at my 401k account because really I don't feel like there's very much I can do. I'm 48 and need to hang in for at least 15 more years, but it is unnerving. From Fannie Mae and Freddie Mac to Leahman Brothers, IndyMac, etc. how much money will the taxpayers have to dole out to rescue these giants. Where's the fudiciary responsibility of the so-called regulators to protect the investors from these crooks?

    September 16, 2008 at 10:39 pm |
  10. Janice in the Mountains

    All these bailouts are disgusting. These free market capitalists and their rabid commentators keep screaming for "free markets", and then when they fail miserably, they come to we the people to bail them out. If they really believe in a free market, get a spine and deal with the consequences. And these Repubs who have wanted to continue to "streamline regulation" (code for eliminating it) are idiots. Hopefully we will get a real administration in the next election instead of two oil boys.

    September 16, 2008 at 10:37 pm |
  11. lisa

    SO. . Since the government is going to "own" at least 80% of it are they going to fire the upper management that got us here. Are they going to take away the massive income/bonus that they erned while take us "real people" to the cleaners with their losses. Maybe their mansions, boats, planes should be confisacted to pay off the debt to the american people. THEY SHOULD BE FORECLOSED UPON, AND FORCED TO GET IN LINE AT THE DSHS AND APPLY FOR MEDICAID. LOSE THEIR LIFE SAVINGS AND INSURANCE. See how greedy they would be then shopping at the dollar store just to make ends meet. I don't see how we are going to survive all of this. . .my parents retirement isn't!!!! WE LOSE EVERYTHING AND STILL HAVE TO BAIL OUT THOSE GIANT CORPORATIONS THAT DO. NOT FAIR THE LITTLE GUY IS LOOSING ALL OF THE TIME.

    September 16, 2008 at 10:35 pm |
  12. Charles in Boston

    Our small business is failing too. Feds can we have a hand out too, or are we so small we CAN fail?

    September 16, 2008 at 10:33 pm |
  13. Robin/Florida

    The bailout for AIG should have been a given, thus avoiding the market drops yesterday and today. It appears that creditors take advantage of people with lower FICA scores by extending credit with these outragious interest rates thus creating a continious problem of defalting loans. I hold creditors responsible for thier greed for profits. If it would not cause a major market collaspe, I would not bail out anyone with taxpayer dollars.

    September 16, 2008 at 10:31 pm |
  14. wyman oxner

    The Fed's should run our economy just like we would run our own house. We need to shore up Social Security, Medicaid, and other programs that take care of our weakest and poorest. Stop bailing out companies that make poor decisions and giving our tax money to foreign countries. Stop erecting new government buildings, schools, and parks. No one will die if we don't build new buildings, schools, and parks. No one will die if we don't build new highways and bridges to nowhere. You wouldn't go to another state to help people that you don't know while your own family starves to death. You would take care of your own family first. Do the same with our country! Let all of the countries that we defend pay us for their defense instead to the taxpayers paying for it. Common sense folks....just common sense.

    September 16, 2008 at 10:30 pm |
  15. karani vincent

    As a leader you should not panic. A leader should always re-assure people .
    Obama is not acting leadership,but pannicky which is dangerous.

    September 16, 2008 at 10:29 pm |
  16. Soma

    Such bailouts should be treated as performance penalties rather than saviours of financial mess. They should come along with very rigid clauses, both in the time and utilization scale.

    September 16, 2008 at 10:28 pm |
  17. Deb Velazquez

    Stacy...I agree! I heard a CEO got a $10 or $20 million bonus...maybe he/she should give it back, it would be a start1

    September 16, 2008 at 10:27 pm |
  18. Don Willis

    OK...so the AIG bailout is a good idea. Where is the accountability for the execs whose greed caused this? Will they get millions in bailout packages????

    September 16, 2008 at 10:19 pm |
  19. Lee

    The $85 billion "bailout" of AIG is not a saving grace. It is simply a slowed version of bankruptcy.

    The company is being loaned enough money to buy it time to liquidate it's assets – such as selling smaller subsidiaries and other assets – in a more controlled fashion than if it were to declare bankruptcy through Chapter 11 protection.

    This will allow the conglomerate to sell its many subsidiaries – in a slumped market no less – and hope that it earns enough money in the sales to repay the Federal Government. If not, it may still declare bankruptcy protection.

    My question is where was the regulatory body – whether it be a self-imposed industry regulator or a government regulator – when AIG backed hundreds of millions of dollars in subprime mortgages - in essence when AIG put all its investment eggs in one basket?

    September 16, 2008 at 10:19 pm |
  20. Rick

    With everything that has occurred on Wall Street, I was wondering how would have social security been affected if the Bush administration and McCain would had privatized it?

    September 16, 2008 at 10:17 pm |
  21. Stacy Gantt

    I am so tired of hearing what Obama and McCain are "Going" to do....

    When do we hold the current administration responsible for what they have done to our country and the hard woking tax payers in the United States...

    If I performed as miserably as President Bush I would be fired and have no pension or lifelong benefits from my job......

    Thank You, Stacy

    September 16, 2008 at 10:17 pm |
  22. Desbrosses

    Idea for the Obama campaign - seize on the fact that Martin Feldstein, Harvard economics professor and one of McCain's economic advisors, serves on the Board of Directors of AIG. Asleep at the switch?

    September 16, 2008 at 10:16 pm |
  23. Jan, Fort White, Florida

    Where is potentially $315 billion dollars in bailouts from the government going to come from?

    September 16, 2008 at 10:16 pm |
  24. steve in missouri

    I have a small business that isnt doing to well im almost in bankruptcy,would like to get federal help also but im not.

    September 16, 2008 at 10:13 pm |
  25. Deb Velazquez

    Does the federal gov't have the money to lend? I guess I didn't think so. If not, who& where do the funds come from? Don't tell me the MOST taxed group in America, aka 'the middle class' is gonna get stuck with that too!

    September 16, 2008 at 10:12 pm |
  26. Annie Kate

    If AIG insures my 401K then I'm glad its getting a bailout. Just think of all the 401Ks that would be at risk if it didn't get one. I hope nothing else fails now.....enough is enough.

    Annie Kate
    Birmingham AL

    September 16, 2008 at 10:11 pm |
  27. Robert in Greensboro

    We're at a crucial point in our history. As a nation, we have to decide if we want a limited government, capitalist-style system like the Founders envisioned, or if we want to continue growing government and expanding entitlements and go the way of Europe towards Socialism. If history is any guide, we'll choose the latter and the government will continue to print money, take on more debt, and inflate the currency until its worthless.

    September 16, 2008 at 10:11 pm |
  28. DAN

    Our govt leaders have sold us out to foreign interests and now they wholesale the future of our children and grandchildren. This is the most infuriating bailout (welfare) yet. These Wall street guys have fleeced the american taxpayer and the Congress has helped them. we need to vote everyone of these cronies out of office and get some term limits for all elected officials to help prevent this from happening again..

    September 16, 2008 at 10:09 pm |
  29. Mary

    I think it should be pointed out that it was Bush who challenged mortgage companies to increase minority homeownership by 5.5 million by 2010. This was revealed in your (CNN's) Special Investigations Unit program – Mortgage Meltdown last month. The report revealed that Bush made the challenge in 2002. This set in motion an objective by mortgage company executives to increase their own bottom line while increasing minority homeownership with subprime mortgages consisting of high interest rate loans to people of low income and risky credit. This is what your report alledged and actually played the clip of the Bush speech where he made this challenge. Therefore, there obviously was no oversight in this process and we have now seen the result of this lack of leadership and protection of America. This crisis is the result of failed Bush politics.

    September 16, 2008 at 10:08 pm |
  30. Kevin

    You have got to be kidding? 50 billion $$$ bailout plan- Obama announced!! Where are we getting this reform? AIG needs to be saved- soon- retirement plans depend on this!!

    September 16, 2008 at 10:06 pm |
  31. maxine

    Why was this bail out for AIG NOT DONE last week? When the fed knew about this on Friday when AIG was asking for 20 billion?

    September 16, 2008 at 10:03 pm |
  32. Kevin

    AIG needs to be saved by the FED. Thanks for talking about this and not discussing anything to do with the PRESIDENTIAL race- Please explain why the economic crisis is not being explained by either candidate- bring back Hillary= not BIDEN!!

    September 16, 2008 at 10:02 pm |
  33. Robert in Greensboro

    So where do the bailouts end? Who sets the criteria? Lehman's allowed to fail and AIG is saved. This is a very slippery slope were on. Irresponsible behavior is being rewarded. The corruption, corporate-government coziness, cronyism, and greed is truly staggering. We've been betrayed by our elected leaders and this is all going to end very badly for the average American. I find it sad that there is little outrage from the citizenry.

    September 16, 2008 at 9:56 pm |
  34. Julie Hewett

    I too agree that AIG must be bailed out ..

    If AIG goes under, there will be a worldwide economic crisis. Then we need to look at how to prevent this going forward and unfortunately I don't think we have anyone either in the White House now or headed there next who has a clue how to fix this problem.

    September 16, 2008 at 9:54 pm |
  35. Alex(Miami

    The government can only do so much, were running out of cash and were going to end up selling out own oil to other countries just to get by.

    September 16, 2008 at 9:52 pm |
  36. Rob - Arizona

    Welcome to Socialism. When can I expect a ration card?

    September 16, 2008 at 9:47 pm |
  37. Keith

    What is the democrat-controlled congress & house doing about it?

    September 16, 2008 at 9:46 pm |
  38. Heather

    The fed did what they had to do with AIG. They insure everything to 401K's so it had to be done.

    September 16, 2008 at 9:45 pm |
  39. Rob - Arizona

    Freddie and Fannie investors lose their life savings only to see foreign investors receive guarantees that their money is safe. Paulson didn't want to "appear" as bailing out investors.

    News Flash: Short sellers made A FORTUNE MR. PAULSON. So much for the free markets.

    Now, AIG receives a bridge loan (code word for BAILOUT). Why didn't Freddie and Fannie receive bridge loans?

    September 16, 2008 at 9:44 pm |
  40. john scott

    Does this mean the AIG CEO will get $10 million or $20 million plus bonus on the tax payer for a losing performance at the head of the company? There should be rules attached to this federal loan that forbid any of the bail out money from going into any bonus package for any board member or corporate officer. If the company I managed were on the verge of bankruptcy under my watch I'd be handed a pink slip and wouldn't get a fat check to take with me. Does anyone agree that these funds should have such limitations?

    September 16, 2008 at 9:38 pm |
  41. Casey (Denver)

    Yes, unfortunately I do think the Feds should bail out AIG .. until we can right the regulatory ship. But why today? Wouldn't it have been $60 billion less expensive for taxpayers on Friday prior to the downgrade?

    What I really want to know is this – we keep hearing that more collapses are likely going forward. I realize no one wants to create panic, but how bad can this financial crisis get? What is the worst-case scenario for the average American?

    September 16, 2008 at 9:35 pm |
  42. Cindy

    AIG is a totally different ball game than Lehman or any of the others. AIG's fall would have hurt many countries and many people. So the federal government jumping in to save it was necessary. Besides the loan they gave is very strict and to boot we will own most of AIG and it's interest. Not a bad deal if they can turn AIG around.


    September 16, 2008 at 9:31 pm |