Old 02-24-2009, 08:02 AM
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Default Re: Help Me Understand This Bank Bailout Thing

s_ebels - 2/24/2009 8:14 PM

In other words...........Those banks are already nationalized. The Gubmint has given them more $$ than they are worth (as a loan, a securitized lo,an) So the Gubminty holds all the valid assets.

Well, the govt holds preferred stock in AIG -- and AIG must pay 10% annual dividend on that stock. Having to toss out that cash is causing a hardship for AIG, so AIG is thinking it needs to convert the govt's preferred stock to general stock. That means it will not have to pay back the govt right away. It can do that after it fails, again.

Remember how we were told the govt was using our money to buy preferred stock, how we would get paid back, how it was a "loan" to AIG?!?

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