Tonight, the Federal Reserve announced that it will lend up to $85 billion to the American International Group(AIG):
Fed in AIG rescue – $85B loan
CNNMoney.com – September 16, 2008
In an unprecedented move, the Federal Reserve Board is lending as much as $85 billion to rescue crumbling insurer American International Group, officials announced Tuesday evening.
The Fed authorized the Federal Reserve Bank of New York to lend AIG (AIG, Fortune 500) the funds. In return, the federal government will receive a 79.9% stake in the company.
Speaker Pelosi issued the following statement on the announcement:
The Bush Administration's eight long years of failed deregulation policies have resulted in our nation's largest bailout ever, leaving the American taxpayers on the hook potentially for billions of dollars. An $85 billion loan is a staggering sum and is just too enormous for the American people to bear the risk; Congress will demand answers to prevent this from happening again.
I have asked Chairman Barney Frank of the Financial Services Committee and Chairman Henry Waxman of the Oversight and Government Reform Committee to hold a series of hearings that will examine the Bush Administration's mismanagement of financial market regulation and how it led us to this remarkable failure. The questions we need answers to are whether fraud played a role in AIG's failure; why foreign stakeholders are not contributing to help pay for the bailout; and why the Bush Administration didn't use its existing regulatory authority effectively and sooner.
The American people deserve to know how eight years of Republican government failed to protect their homes, pensions, college saving plans, and other long-term investments. We cannot afford four more years of the Bush Administration's mismanagement of our economy.