TOPICS > Economy

A Year After Bailout, Uncertain Future for AIG

BY Online DA  September 16, 2009 at 12:00 AM EDT

AIG; Photo courtesy Creative Commons.

The Online NewsHour spoke to the Wall Street Journal’s Dennis Berman for an update on the company’s fortunes.

It was one year ago this week that the Federal Reserve came to the rescue of AIG by extending an $85 billion line of credit to the insurance giant.

As the housing market began to crumble, the company realized enormous losses tied to its sale of credit-default swaps – essentially complex financial instruments designed to protect investors against default in an array of assets, including subprime mortgages. When the insurer was unable to make up for those losses, the government deemed that given the enormous stake financial institutions in the U.S., Europe, and Asia held in AIG, the company was “too-big-too-fail.”

“Now that the government has a stake in AIG, it’s not just too-intertwined or too-big-to-fail, it’s too much of an investment for the U.S. taxpayer,” according to Berman. “Whether we like it or not, we as taxpayers have to save this company to save our own investment.”

Listen to his views on AIG here: