Last night around 10:20 p.m. news broke that the Fed agreed to loan $85 billion to American Insurance Group (AIG). This is the latest in a recent run of corporations that needed fast cash or went bankrupt.
As I understand the situation, the loan is to give AIG time to liquidate some of its assets and get a handle on things before paying the Fed back in two years time. I like this. I like it better than straight bailouts. I get that AIG failing overnight could shake consumer confidence and perhaps induce people to start dumping stock shares left and right. I also get that AIG is in a precarious position and needs to take steps to turn the Titanic around.
Hopefully, the loan will be paid back and this won't be another example of naked corporate welfare.