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THURSDAY, NOVEMBER 26, 2009
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AIG's Bailout Cash Flowing to Hedge Funds

$52B has paid off those who bet against the housing market

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(Newser) – The government cash flowing steadily into AIG is going in no small part to pay off hedge funds that bet against the housing market, the Wall Street Journal reports. The hedge funds placed credit default swap bets with other banks—Deutsche Bank and Goldman Sachs are specifically named in documents reviewed by the Journal—but AIG then insured the banks. Now it’s on the hook for billions.

It’s unclear how many billions that will eventually be, but of the $173 billion taxpayers have pumped into AIG, roughly $52 billion has gone to cover these housing bets so far. “AIG's financial-products division went heavily into the business of speculation,” explained one consultant, “and its gambling debts are what taxpayers are paying off right now.”

An AIG office building is shown Tuesday, March 17, 2009 in New York.
An AIG office building is shown Tuesday, March 17, 2009 in New York.   (AP Photo/Mark Lennihan)
A woman enters an AIG office building, March 16, 2009. AIG used more than $90 billion in federal aid to pay out banks, some of whom had received their own multibillion-dollar government bailouts.
A woman enters an AIG office building, March 16, 2009. AIG used more than $90 billion in federal aid to pay out banks, some of whom had received their own multibillion-dollar government bailouts.   (AP Photo/Mark Lennihan)
Former longtime American International Group Inc. CEO Maurice
Former longtime American International Group Inc. CEO Maurice "Hank" Greenberg attends a reception hosted by the China-United States Foundation in Beijing, Saturday, Aug. 9, 2008.   (AP Photo/Tom Curley)
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2 comments
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Observer
Mar 18, 09 8:37 AM CDT
What a piss-off. Do I get to have a government bailout when I drop $1,000 in Vegas? They gambled and lost big. Screw them. And get the bonuses back from these thieves. Reply
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radnip
Mar 19, 09 4:39 AM CDT
Those the same hedge funds paying millions per employee and closed to everyone who cannot come up with a multi-million dollar investment? Guess they have enough money to be bailed out. I know poor people are too poor to be bailed out. Middle class are too poor to be bailout out. I think even those making $500k a year are just about too poor to be bailed out. But those making millions. Of course, they need all the help they can get! Reply
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