FED RESERVE CHAIRMAN BERNANKE DEFENDS AIG RESCUE…

Posted on March 3, 2009. Filed under: News And Politics... |

 

Federal Reserve Chairman Ben Bernanke says that our country faces a prolonged episode of economic stagnation “if lawmakers do not act quickly on Obama’s budget".  Here’s another Obama fear monger instilling fear to us all unless we do what Obama says.  In spite of the previous $150 billion AIG received from the government, they reported a record $61.7 billion quarterly loss on Monday.  What does that tell you?  They’re running their company into the ground!  Why is Obama giving another $30 billion to "PIG" when they just lost twice that amount due to poor management?  That’s like giving billion dollar chips to an insatiable gambler in front of a casino and telling him to spend it wisely.

 

Bernanke said it’s possible that Obama could go back to Congress for more money to clean up the banking sector.  Maybe we should clean up Congress, and weed out the garden of corruption that has taken root there.  AIG went on spending sprees with the billions they got from us.  Now they want preferential treatment.  There’s a government free-for-all for banks and large corporations, but the heck with the little people.  I’m tired of hearing that the government is helping AIG because “they are too big to fail”.  The way I see it, the bigger they are, the harder they fall, and the way they are spending our money, they will fall…hard.  Isn’t it ironic that the more lifelines the government gives them, the deeper they sink into debt.

 

Bernanke is defending the multiple bailouts to AIG because, as he says, “AIG is the largest insurance company in the world”.  They may be the largest, but he talks as if they’re the only insurance company in the world.  Here’s some advice, Bernanke.  Let the AIG chips fall where they may.  You’ll be saving us taxpayers a lot of stress and a lot of money.  There are thousands of small insurance companies that would be more than willing to take over AIG’s insurance clients.  Think of how many small insurance companies would benefit from this move?  We’d be saving billions of dollars, and it would contribute to the economic growth of many small businesses that seem to have fallen through the cracks of big corporations.  That would certainly send a positive message to the small businesses that the government has their backs.  Obama has big ears, but he has selective hearing.  Unfortunately, Obama is turning his back on small businesses, and putting our money where his allies are―into big corporations who contributed heavily to his rise in power…

 

QueenBee

 

BERNANKE DEFENDS AIG RESCUE, SAYS U.S. HAD NO CHOICE
Tue Mar 3, 2009 2:03pm EST
By Mark Felsenthal
 
WASHINGTON (Reuters) – U.S. Federal Reserve Chairman Ben Bernanke on Tuesday defended the government’s latest bailout of embattled insurer AIG, telling irate lawmakers that he was also angry, but that the failure to act could have triggered an economic disaster.
 
Bernanke, in testimony to the Senate Budget Committee, gave a grim view of U.S. economic prospects, saying labor market conditions may have worsened in recent weeks. His comments helped drive the stock market briefly lower.
 
Pressed by the Senate committee to justify the latest in an expanding series of bailouts for American International Group, Bernanke said there was no alternative, even though the company had been irresponsible.
 
"We know that failure of major financial firms in a financial crisis can be disastrous for the economy. We really had no choice," he told the panel.
 
The U.S. government threw a fresh $30 billion lifeline to AIG on Monday, as part of a restructured bailout that had earlier swelled to about $150 billion.
 
AIG, which reported a record $61.7 billion quarterly loss on Monday, has been slammed by losses on its credit default swaps that guarantee mortgage-linked securities.
 
Lawmakers told the Fed chairman that public patience has worn thin over the generous support for the foundering insurer even as smaller firms and households are taking heavy hits from the slumping economy.
 
"Right now, small businesses across the country, who played by the rules, paid their bills on time, can’t get a line of credit, while AIG seems to have an open spigot for taxpayer money," said Senator Ron Wyden, a Democrat.
 
Bernanke said AIG’s extensive relationships with banks around the globe presented the risk of "contagion" should the company fail, and said authorities were working hard to try to neutralize dangerous positions.
 
"We have been doing what we can to break the company up, to get it into a saleable position and to try to defang it," he said. "If there’s a single episode in this entire 18 months that has made me more angry, I can’t think of one (other than) AIG," Bernanke added, equating the company’s financial services division with an unregulated hedge fund.
 
WIDER BUDGET GAP A NECESSARY EVIL
 
Bernanke told the committee that restoring stability to the battered financial sector was a prerequisite to a recovery from the deep U.S. recession, and said a surge in U.S. government debt was unavoidable.
 
"We are better off moving aggressively today to solve our economic problems," he said. "The alternative could be a prolonged episode of economic stagnation that would not only contribute to further deterioration in the fiscal situation, but would also imply lower output, employment and incomes for an extended period."
 
In addition to the likelihood of a worsening jobs market, Bernanke said many businesses are burdened with excess inventories and are likely to cut production further in the months ahead.
 
The blue-chip Dow Jones industrial average, which closed below 7,000 for the first time in 12 years on Monday, dipped following Bernanke’s comments before rebounding as U.S. President Barack Obama spoke separately.
 
The collapse of the U.S. housing market bubble has set off a chain reaction tipping economies around the world into recession, and heaping fiscal strain on governments.
 
A budget proposal released by the White House last week envisioned a record budget deficit of $1.8 trillion this year, and a rise in the ratio of debt to gross domestic product to about 60 percent from 40 percent — the highest level since the early 1950s.
 
"All else equal, this is a development that all of us would have preferred to avoid," Bernanke said.
 
He said a decision on whether the government needs to increase the size of a $700 billion bank rescue package would depend on bank "stress tests" being conducted by regulators and the direction of the economy.
 
The president’s budget plan included a $750 billion "placeholder" to take into account the possibility the administration could go back to Congress for more money to clean up the banking sector.

 

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