The Fall of AIGhttp://www.fool.com/investing/dividends-income/2008/09/17/the-fall-of-aig.aspx Morgan Housel
September 17, 2008
Boy, who would have ever thought the last-minute bailout of Bear Stearns back in March would end up being one of the more minor financial interventions we'd see this year?
In just the past 11 days, the government was forced to take over or seal the fate of:
AIG (NYSE: AIG ) -- facing an inevitable collapse without a huge cash injection -- finally got the gift it needed late Tuesday night after the Federal Reserve agreed to provide an $85 billion credit facility that'll prevent what would have been by far the largest bankruptcy in history, sending the markets into unimaginable panic.
Terms of the deal are very similar to the recent bailout of Freddie Mac (NYSE: FRE ) and Fannie Mae (NYSE: FNM ) -- I'm willing to bet they just used the same paperwork. In return for the loan, the government will get warrants to purchase 79.9% of the company's common stock, diluting existing investors into oblivion. CEO Robert Willumstad will be replaced by former Allstate (NYSE: ALL ) CEO Edward Liddy.
Geesh … another bailout?