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No, we didn't. Where we protected AIG (and it wasn't everywhere) it was because (1) it was involved in lines of businesses like the banks, and (2) it was financially intertwined with the banks (i.e., it had written "insurance" on the questionable assets on the banks' books). We bailed out the banks and AIG so that we could maintain functioning financial and payment systems and avoid a depression.
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I'm well versed in the Cassano debacle.
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We bailed out GM and Chrysler (don't recall whether Ford got help) because of the direct loss of jobs in the auto industry associated with their failure. That would have been bad, but that's not the stuff of total economic collapse.
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Paying Goldman and the rest of the banks out of AIG at 25 cents on the dollar would have been more than adequate. Goldman itself claimed at first that it would have been just fine if AIG had gone under and paid out nothing.
https://www.cbsnews.com/news/new-doc...-aig-collapse/
Of course, as the article notes, Goldman soon changed that tune.
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This is one of the crazy/stupid things you say a lot. The assets recovered their value because the underlying mortgages performed better than people feared during the bank run height of the crisis. There's nothing to recover if people aren't paying their mortgages.
Yes, accommodating monetary policy helps people keep paying their mortgage in a number of different ways, but that doesn't seem to fit with your implied conspiracy.
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The assets held value because we came in and saved the market in securities backed by them. I believe the Fed was making the market in MBS.
The underlying residential mortgages continued to perform like shit for a long period of time.
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That gets the banks/investors paid, but it does nothing for the performance of the MBS going forward.
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It bought time for the economy to recover a bit so some of the mortgages underlying the MBS could start performing again. If the Fed had not bought all those securities, the market for them would have frozen. As it should have. Which is why I call all of the people who bet on that market remaining robust "losers." They were. They are. They are failed business people.
And no, it's no defense that they were victims of a financial crisis. Charles Prince at Citi explained exactly what these people were doing: "When the music's playing, you've got to dance." They were knowingly taking risks in a market that even people like Bill Gross said as early as 2007 looked like a fraud, a house of cards.
All of these failed business people knew or should have known housing was going down. People had been chattering about it for three years prior to Bear Stearns' issues. Fuck... I represented subprime credit card and auto lenders in 2000-2003 and recall thinking "subprime mortgage" sounded like "lead zeppelin."
But hey... I'll be gone, you'll be gone. I know one mortgage broker who made so much in the housing bubble that he retired at 35. So maybe "loser" doesn't fit. Maybe "knowing participant in massive suspension of disbelief/fraud" is a better descriptive. Either way, these people should all have lost their jobs. But 9 out of 10 of them didn't. We bailed them out, they stayed in place, and they've enjoyed a grand run up in the stock market ever since.
