WASHINGTON, Nov. 11, 2008

Buddy, Can You Spare A Billion?

As Economy Tanks, More Companies Reach For A Piece Of The Bailout Pie

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(CBS/AP)  The government's $700 billion bailout plan, which won Congressional approval in October, was designed to ease the mounting stresses on the nation's economic crisis. But the controversial legislation has invited a chorus of financial rescue pleas from industries nationwide and sparked controversy over which companies, if any, deserve a government lifeline.

Most recently, the situation surrounding insurance giant American International Group has underscored the problem. When the government offered an emergency loan to AIG in September, eyebrows shot up at the $85 billion price tag. Now it looks like pocket change.

The size of the AIG lifeline swelled to more than $150 billion on Monday, a record for a private company. But the head of the broader financial rescue package was cool to other companies reaching for a piece of the bailout pie.

The new AIG package includes a $40 billion chunk of the $700 billion financial bailout. It's the first time money from the big rescue bill has gone to any company other than a bank.

General Motors, Ford and Chrysler, burning through cash and bleeding jobs, are prodding the government for more help. The leaders of the House and Senate have urged Treasury Secretary Henry Paulson to get some of the $700 billion to the Big Three.

The automakers, covering all their options, are also pushing to get help as part of a new, multibillion-dollar stimulus package for the economy if Democrats push it through Congress when a lame-duck session convenes next week.

President-elect Barack Obama has said his transition team would explore options to provide relief to the auto industry, and President George W. Bush's press secretary said Monday the White House would "listen to" Congress if they try to help automakers.

Any money would be on top of the $25 billion in loans that Congress passed in September to help retool auto plants to build more fuel-efficient vehicles.

Neel Kashkari, the interim head of the $700 billion bailout program, was cool to the idea of funneling the money to companies beyond banks and AIG.

"This morning's action with AIG was a one-off event necessary for financial stability. It is not the establishment of a new program," he said at a financial conference in New York.

According to the Wall Street Journal, the Treasury has committed all but $60 billion of the first $350 billion in funds granted by Congress under the bailout plan.

In a separate development late Monday, the Fed granted the request of credit card company American Express Co. to become a bank holding company.

Although the new status will subject the company to greater regulatory scrutiny, American Express will also gain access to the Fed's emergency lending program. The company, which last month announced plans to slash its global work force, has been hard hit by the credit crisis as even the more affluent consumers the company caters to struggle to pay off their debts.

The original Fed loan to AIG was $85 billion, and the Fed added a $38 billion loan in October. But that has not been enough to firm up the company, which is so big and interconnected to other firms that its failure would devastate the economy.

Under the new plan, the Fed will provide $60 billion in loans. The Treasury will provide $40 billion to buy up preferred stock. And the government will spend close to $53 billion to buy up mortgage-backed assets and other AIG contracts on debt.

Total package: $153 billion. And AIG has also taken advantage of a federal plan to buy up short-term debt routinely issued by companies, known as commercial paper.

The $40 billion going to AIG will buy preferred shares of company stock, giving taxpayers an ownership stake. In turn, restrictions will be placed on executive pay at the firm.

The Fed stepped in with an $85 billion loan in September because the company is so big - linked to mutual funds and retirement products held by millions of Americans, not to mention ties to U.S. mortgages - that its failure would have devastated the economy.

"The bailout continues, and essentially exemplifies the notion of `too big to fail,' said Anthony Sabino, a professor of law and business at St. John's University. "But the question must be asked: Where does it end?"

AIG also came under fire for spending hundreds of thousands of dollars on a California retreat just days after the Fed loan was announced in September.

In other bailout news Monday, mortgage finance company Fannie Mae said it may have to tap a $100 billion government lifeline as early as next year after posting a massive third-quarter loss.

Fannie Mae, seized by federal regulators more than two months ago, posted a staggering loss of $13 per share for the July-to-September quarter, compared with a loss $1.56 a share, for the same period last year.

The company's net worth - what it owns minus what it owes - fell to $9.4 billion at the end of September, from $44.1 billion at the end of last year. If that number turns negative, Fannie Mae said it would be required to tap Treasury for help.

The new package for AIG was unveiled as the insurer issued new, bleak quarterly results. It lost $24.5 billion in the third quarter after turning a $3.1 billion profit in the third quarter of 2007.

Under the restructuring, AIG also gets easier terms on the Fed loans, reducing the risk AIG will have to sell off assets at firesale prices to pay back the government.

"This is a very big deal for AIG. It essentially plugs two of the biggest holes that the company had," said Rob Haines, analyst at CreditSights.

Fed officials expressed confidence the money would eventually be repaid to taxpayers, and presidential press secretary Dana Perino said it would also be good for the fragile U.S. economy.

The federal help "will allow AIG to continue to restructure themselves in a way that will not hurt the overall economy. AIG is a large, interconnected firm," she said.

AIG Chief Executive Edward Liddy called the plan a "win-win."

"It sends a strong signal to our policy holders, to government, to regulators around the world, to our business partners and counterparts that AIG is in fact on the road to recovery," he said.



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Add a Comment See all 83 Comments
by centerfall93 November 11, 2008 11:47 AM PST
The GW Bush Legacy:

Endless War
Financial Ruin
Taxpayer subsidized welfare to large corporations

Is it any wonder that Obama won? He''s got his work cut out for him. A trial for Bush and Cheney at the Hague would be a great start.
Reply to this comment
by solarrays247-2009 November 11, 2008 12:03 PM PST
The GW Bush Legacy:

Endless War
Financial Ruin
Taxpayer subsidized welfare to large corporations

Is it any wonder that Obama won? He''''s got his work cut out for him. A trial for Bush and Cheney at the Hague would be a great start.

Posted by Centerfall93 at 11:47 AM : Nov 11, 2008

I would be willing to help bring that trial at the Hague to fruition! Just advise me what needs to be done!
Reply to this comment
by gop_will_win November 11, 2008 12:05 PM PST
This is all Obamas fault. Had McCain been elected the market would be closing in on 20,000 by now. Stupid liberals!
Reply to this comment
by damn_fast November 11, 2008 12:13 PM PST
Why do you think Obama will be any different, he is urging Bush to help bail out the Big 3. While I do not support Bush of these bailouts the Dems are just as happy to be giving this money away. Not to mention the markets bleeding knowing Obama is going to raise capital gains.
Reply to this comment
by windmaster12 November 11, 2008 12:14 PM PST
If Mccain won
The Market would be doing the exact same thing its been doing under Dumbya
and The rest of the GOP criminals
Tanking!!!
Reply to this comment
by georgew1956 November 11, 2008 12:27 PM PST
why bailout gm they tanked and will not come out of it with that union so let the union bail them out period 100,000 a year workers and half goldbrickn ( not with our money gm )
Reply to this comment
by docpeter1953 November 11, 2008 12:30 PM PST
This is all Obamas fault. Had McCain been elected the market would be closing in on 20,000 by now. Stupid liberals!

Posted by gop_will_win at 12:05 PM : Nov 11, 2008
___________________

Good Morning GOP, I am sure glad to see you here trolling today. Haven''t heard from you in three days, was worried that you were ill.

I am sure that you didn''t mean 20,000 for the market. I think you left out a few 0''s. You meant 20M or 20B didn''t you?
Reply to this comment
by hennighg November 11, 2008 12:30 PM PST
Hey, wait! Hey, they promised me trickle down. Is this it? I get to give the rich even more money? Some trickle down. Shoot. I coulda done better my own self.
Reply to this comment
by docpeter1953 November 11, 2008 12:34 PM PST
Hey, wait! Hey, they promised me trickle down. Is this it? I get to give the rich even more money? Some trickle down. Shoot. I coulda done better my own self.

Posted by hennighg at 12:30 PM : Nov 11, 2008
________________

If you really want to find out about ''trickle down'' you need to talk to a Plumber, not ''Joe the Plumber'' since he wasn''t licensed. A plumber can explain what ''trickles down''. It is the same, just a different department.
Reply to this comment
by antoniof123 November 11, 2008 12:38 PM PST
The most widely misquoted scripture in the bilble.

For the love of money is the root of all evil.

Not money but the love.

Looks like the shoe fits doesn''t it.

What a wild ride and they say history repeats itself.

Looks like we are in for a repeat soon.
Reply to this comment
by antoniof123 November 11, 2008 12:39 PM PST
Does any one think 700 billion dollars will enough to buy all these bad assets?

Posted by daveqwerty at 12:37 PM : Nov 11, 2008

NO!!!!
Reply to this comment
by missingamerica November 11, 2008 12:43 PM PST
Well, you have to admit:

Bush managed America''s finances just exactly the same way he managed those of the companies he ran.

lolll...and, of course, being a good little Republican his biography will say "It wasn''t my fault.".
Reply to this comment
by kphx November 11, 2008 12:44 PM PST
AMEX wants a slice of the pie too ... converting itself to a bank, so it can get, its share of our (taxpayers) money and write themselves a big bonus check ... Oh this is what Free Market economy is, I guess. Take the dumb taxpaying peoples money for free ...
Reply to this comment
by kphx November 11, 2008 12:49 PM PST
This is all Obamas fault. Had McCain been elected the market would be closing in on 20,000 by now. Stupid liberals!


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Posted by gop_will_win at 12:05 PM : Nov 11, 2008

We got a pundit here ... All the screw-ups of the past eight years would have turned into gold within a week, if McCain had been elected. Get a life man.
Reply to this comment
by missingamerica November 11, 2008 12:49 PM PST
kind of like people who dont pay their credit cards and mortgages....not their fault either

Posted by jamesm12341 at 12:48 PM : Nov 11, 2008

Tough, making ends meet - when you have a President and a Republican Party controlling Congress and doing everything in their power to create funny money out of leveraged debt and increase energy costs so as to cause hyperinflation on all fronts...
Reply to this comment
by kphx November 11, 2008 12:50 PM PST
Circuit City should have done the same ------------------------------------- Posted by daveqwerty



They tried to, unfortunately, the used DHL to courier the paperwork.


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Posted by DaVicar1 at 12:48 PM : Nov 11, 2008


Good one !!!
Reply to this comment
by skscbssports November 11, 2008 12:52 PM PST
i manage small business (my family) with limited money.
now economy is so down, can i get bailout ?
Reply to this comment
by lemonskink November 11, 2008 12:52 PM PST
Wake up, these bailouts are handouts. Who''s to say they won''t want another bailout in 2 years time because things just didn''t work out. Get the h.ell out of the 1.5 billon a week killing machine in Bush''s war for starters. How much did the Bush/Cheney regime make off that skimming proposition? It''s corporate welfare at it''s best.
Reply to this comment
by missingamerica November 11, 2008 12:53 PM PST
Yeah, you would have to admit that...if you were STUPID ENOUGH to forget that Congress passed this bill.

Posted by DaVicar1 at 12:50 PM : Nov 11, 2008

These efforts are being made to fix a problem the Republicans created.

Now if you were a tad more intelligent, you would understand that the Republican tradition of inventing a lie and then repeat, repeat, repeat is passe.

No matter how many times you attempt to divert attention to this bailout, the responsibility ALWAYS comes back to Republican policy.
Reply to this comment
by missingamerica November 11, 2008 12:55 PM PST
i make ends meet, everyone i know makes ends meet. are we smarter, luckier, harder working? what?

Posted by jamesm12341 at 12:51 PM : Nov 11, 2008

From the way you talk and how much time you spend posting, I suspect that your pop is still paying your way.
Reply to this comment
by missingamerica November 11, 2008 12:57 PM PST
why is it so hard for you libs to even fathom that people can take care of themselves and not rely on government?

Posted by jamesm12341 at 12:56 PM : Nov 11, 2008

lolll...you are funny. Why don''t you practice what you preach, and go out and create some jobs, RINO?

You know - to employ some "libs" and get them off of your base assumption: Everybody but you is on welfare.
Reply to this comment
by missingamerica November 11, 2008 1:01 PM PST
Why should the good-guys accept responsibility for what happend in a Democrat Majority-Led Senate, and a Democrat Majority-Led House?

Posted by DaVicar1 at 12:58 PM : Nov 11, 2008

That is SUCH a stupid argument.

What policy has been passed by this Congress and signed by this President that lead to this fiasco?

Are you really arrogant enough to think that everybody else in America is stupid enough to believe you when you assert that past Republican actions had no effect, but current Democratic actions have had a nearly instantaneous effect?

On the massive, dominated-by-inertia system that our economy is?

It takes YEARS for Republican stupidity to appear in the economy...

But now those years have passed.
Reply to this comment
by Michael Arnold November 11, 2008 1:01 PM PST
The collapse is snowballing. Expect gas prices to be raised directly after the Christmas holidays. (heh, heh)
Reply to this comment
by missingamerica November 11, 2008 1:02 PM PST
ou got that right off of BaLack Al-Bamas website, didnt you?

Posted by DaVicar1 at 12:59 PM : Nov 11, 2008

Oh, my...hey, your racist slip is showing, child. Pull your dress down.
Reply to this comment
by txlakeside November 11, 2008 1:06 PM PST
Da vic ... idiot liar! Dems have only had control since 06. Typical repub bs ... say something long enough and it must be true!

IDIOT LIAR!
Reply to this comment
by used2bfedup1 November 11, 2008 1:07 PM PST
How bout that. Republicans all against welfare.... Until its time for them.

Hypocrits.
Reply to this comment
by missingamerica November 11, 2008 1:07 PM PST
you call it arrogance, I call it common-sense...why split hairs?

Posted by DaVicar1 at 01:05 PM : Nov 11, 2008

When I read comments like you post, it becomes apparent to me that good sense is not all that common, after all.
Reply to this comment
by missingamerica November 11, 2008 1:09 PM PST
Aren''''t you meant to make money from treasure?

Posted by daveqwerty at 01:08 PM : Nov 11, 2008

Oh, they are; indeed they are.

Unfortunately, it is from the treasure held in the U.S. Treasury.
Reply to this comment
by used2bfedup1 November 11, 2008 1:10 PM PST
Ol Vic still PO''d about losing. Makes him a loser.

He was for the McCain Lieberman ticket.
Reply to this comment
by missingamerica November 11, 2008 1:12 PM PST
He was for the McCain Lieberman ticket.

Posted by used2bfedup1 at 01:10 PM : Nov 11, 2008

lolll...they should give Lieberman his own, personal country - of which he would be the only citizen.

Then at least I would know what country he worked for and who he represented within that country.
Reply to this comment
by used2bfedup1 November 11, 2008 1:13 PM PST
Sorry Dude you cant lay this one in Obamas lap it was all your best president''s idea and fault.

You know the best president the Republicans have ever had and probably the smartest W Bush.

You know the guy that has run every business he has ever owned into the ground.
Reply to this comment
by edward1975-2009 November 11, 2008 1:13 PM PST
mtracy12: It''s ignorance such as yours that amazes me. Congress holds the purse strings, not the President, you wish to point fingers, make sure they are pointing at that whack job Pelosi and crew, they have been nothing but a rubberstamp for a lame duck President Bush. And idiots like you just sent more spineless wonders into Congress to now push a socialist President Obama''s agenda.
Reply to this comment
by missingamerica November 11, 2008 1:14 PM PST
This "Obama" bailout plan of $700 billions was a "mistake" from the beginning!!! Stop all other bailouts from this point forward!!! No Way, No How!!!

Posted by scb1111_1 at 01:10 PM : Nov 11, 2008

lolll...you''re another funny man.

Tell the truth, scb...you WANT America to fail, don''t you?

You positively LUST for the days of the Great Depression, when you could get workers willing to slave for an apple and a bowl of soup, DON''T YOU?

lollll....trust fund baby...
Reply to this comment
by gop_will_win November 11, 2008 1:15 PM PST
Ever since Obama became prsident, the stock market has been bleeding money. This is all his fault and the fault of the liberals who voted for him.
Reply to this comment
by missingamerica November 11, 2008 1:18 PM PST
Ever since Obama became prsident, the stock market has been bleeding money. This is all his fault and the fault of the liberals who voted for him.

Posted by gop_will_Win at 01:15 PM : Nov 11, 2008

a) He is not President

b) Use better flame-bait...the DJIA and other index and stock charts are way too easy to access.

Might I suggest that you claim that Obama intends to confiscate the property of all people who make more than, say, $250,000?

That should be good for a rise...
Reply to this comment
by tejasdemo November 11, 2008 1:19 PM PST
Every single bad thing happening in our great country is the fault of Republicans and the complete morons who voted for them.

Reply to this comment
by gop_will_win November 11, 2008 1:22 PM PST
a) He is not President

b) Use better flame-bait...the DJIA and other index and stock charts are way too easy to access.

Might I suggest that you claim that Obama intends to confiscate the property of all people who make more than, say, $250,000?

That should be good for a rise...


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Posted by ibsteve2u
===================
I grow tired of your feeble excuses for Obama liberal.
Reply to this comment
by hitoyou1 November 11, 2008 1:22 PM PST
Every single bad thing happening in our great country is the fault of Democrats and the complete morons who voted for them.
Reply to this comment
by missingamerica November 11, 2008 1:22 PM PST
tejasdemo = gop_will_Win??
Reply to this comment
by gop_will_win November 11, 2008 1:23 PM PST
Yeah Dow Jones should be @ 100K.


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Posted by daveqwerty
=======================
100K? You got to be kidding. Markets dont go up that fast. I would however say it would be pushing 20,000 today had there been a McCain victory.
Reply to this comment
by hitoyou1 November 11, 2008 1:23 PM PST
Why don''t they just give the U.S. away?
Reply to this comment
by gop_will_win November 11, 2008 1:24 PM PST
tejasdemo = gop_will_Win??


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Posted by ibsteve2u
=====================
How many times do I have to tell you liberals I have 2 ID''s, this one and Mrs_Premise. I am not any of these other posters you claim I am.
Reply to this comment
by tallyman2008 November 11, 2008 1:25 PM PST


Tell you one Industry who is not hurting

Television - the Big Networks


Betcha they just made at least $500,000,000 in profit

From all the Political Advertisements in last number months



And speaking of TV Ads

The Big Car Companies

How much do they spend on TV and other Ads each week ?

Have they cut back any ?


Seems a LOT of money - a LOT

Is being flushed down the TV Ad Toilet each week

From a LOT of businesses who really do not need to advertise




Reply to this comment
by missingamerica November 11, 2008 1:25 PM PST
Why don''''t they just give the U.S. away?

Posted by Hitoyou1 at 01:23 PM : Nov 11, 2008

lollll...after, what - 14 years of Republican Congress and 8 years of a Republican President - and all of their debt?

You can''t get clear title to the U.S. any more.
Reply to this comment
by frankson2 November 11, 2008 1:25 PM PST
WHY ARE WE REWARDING CORPORATE FAILURE AND MISMANAGEMENT?
Reply to this comment
by lochlan-2009 November 11, 2008 1:25 PM PST
"Any money would be on top of the $25 billion in loans that Congress passed in September to help retool auto plants to build more fuel-efficient vehicles."

I keep trying to tell you people, in case you couldn''t tell these last eight years, the markets are fixed. Right now they are killing two birds with one stone. GM is priced for the rich to see the 1300% returns they are used to. Gm also is going to cut paying their pensions (government accepted), as they''ve made blatantly obvious these last few weeks in the market propaganda media. Now once they are "back on their feet" and raking in the cash come 2011-2012, do you think they are going to reinstate paying those pensions? Of course not, so let''s see. Do everything possible, in the propaganda media, to make your value appear down. Scare all the grandparents into selling their stocks at huge losses (95%) by telling them the company is going to be "worthless" ("sell, grandma, now that it''s at the bottom"). Move the rich and connected in for profits that are going to be through the ceiling in three years (what''s 1300% on a few million?). Ask the government to pick up the pensions or they''re going to have to cut them. Once those are gone start making money hand over fist, and all those pensions, conveniently, are gone, meaning more money for the companies elite, at the expense of people who worked their whole life, for a promise reneged on.

Love American greed.
Reply to this comment
by paidgopshill November 11, 2008 1:26 PM PST
Every single bad thing happening in our great country is the fault of Democrats and the complete morons who voted for them.

Posted by Hitoyou1

Exactly!! There is nothing wrong with this country that 8 more years of Bush working with a Republican controlled Congress couldn''t fix. I shudder to think of the dismal state this country will be in after four years of liberal rule.
Reply to this comment
by gop_will_win November 11, 2008 1:27 PM PST
WHY ARE WE REWARDING CORPORATE FAILURE AND MISMANAGEMENT?


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Posted by frankson2
=====================
Its the American way! I guess you liberals are against that too.
Reply to this comment
by systems6-2009 November 11, 2008 1:28 PM PST
TOTAL COLLAPSE!!! It''s getting worse by the day and I see a total collapse coming. Hang on for the ride folks
Reply to this comment
by gop_will_win November 11, 2008 1:28 PM PST
Must be nice to live in la la land.


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Posted by melchg
====================
Lala land? I dont live there. I live in Altoona Pennsylvania, the birthplace of Jesus.
Reply to this comment
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