It’s AIG….the FEDS own another company

Who is AIG (American International Group), and why should you care about them? AIG is a worldwide conglomerate made up of hundreds of businesses all over the world, although many of AIG’s subsidiaries wrote insurance of various types. They are believed to be the world’s largest insurer in spite of not being a household name here in the US. Interestingly, the plan was to have business cycles in some businesses offset cycles in others, giving AIG a steady stream of revenue. Smart. Lately, as we all know, AIG is bogged down in the mortgage crisis, since a) they insured many intra-bank and loans and mortgage securities, along with insuring complex mortgage debt derivatives, and b) some of its insurance companies own large mortgage-backed securities holdings. The Fed believes that the complexity of AIG ’s business, and the fact that it does business with thousands of companies around the globe, make its survival critical. The US government, thereby the taxpayer, loaned them $85 billion for two years and now owns 79.9% of AIG! (Along with 100% of Fannie and 100% of Freddie.) Taxpayers are all hoping for a rally in AIG’s stock!