Bernanke Defends Aid to AIG Bailout Averted 'Potentially Calamitous Effects' on Economy; Seeks Full Review

JANUARY 20, 2010

This article is addressing the statement by Fed chairman Ben Bernanke on the central bank’s decision to extend credit to American International Group Inc. The billions of dollars in aid provided to the insurance company are ­stated as a preventative measure to ensure that AIG does not fail and thus help stabilize the US economy:

“‘The Federal Reserve extended this credit to prevent the immediate disorderly failure of the company, an event that likely would have led to a significant intensification of an already severe financial crisis and a further worsening of global economic conditions,’ Mr. Bernanke wrote in the letter to the Government Accountability Office… ”

In response to angry taxpayers, it was stated that this was in the best interest of everyone and financial assistance included taxpayer protection. The Fed also called AIG under new management and requested major stock ownership be handed to the US. It was also stated that the loan will be repaid by September 2013.

In response to the complaints about lack of available information on the AIG loan, Bernanke stated that weekly and monthly reports on financial assistance and details on the AIG loan is published and provided to both the public and congress. The entire scenario raises some questions and has us questioning how informed Americans are about the details of the matter. It’s also interesting why politicians like Darrel Issa, a member of the U.S House of Representatives, is asking for a clearer picture of what really happened from both the fed and the treasury. In his statement he also asks why it took so long for the details to be provided to the public in the first place:

‘“I have asked repeatedly that documents from both the Treasury and the Fed be provided to the oversight committee so that we can gain a full picture of what really happened, who knew what and how is it that the American people were kept in the dark for so long,’ Mr. Issa said. ‘If the Fed is as vested in oversight and transparency as they claim in this letter, they should be quick to provide us with all the support we need to complete this bipartisan investigation.”’

Sources:

http://online.wsj.com/article/SB10001424052748704561004575013783488143998.html?mod=googlenews_wsj