As you probably have heard by now, last night Treasury Secretary Hank “I would never put the taxpayer on the hook for a private company” Paulson and Ben Bernanke reversed their position on bailing out AIG, and agreed to loan the insurance giant $85 billion, to be spread out over two years. Why they gave them an $85 billion loan when the company asked for only (only!) $40 billion on Sunday is frankly totally unclear to us at the moment — we’ll have to get back to you later on that. Naturally, their decision is already causing controversy, since they are, well, using taxpayer money to fix the bad business decisions that a private company made, and lawmakers are all in a tizzy since Paulson and Bernanke apparently didn’t seek any legislative authority or even opinions before agreeing to the loan. “The secretary and the chairman of the Fed, two Bush appointees, came down here and said, ‘We’re from the government, we’re here to help them,’” House Financial Services Committee chairman Barney Frank told the Times. “I mean this is one more affirmation that the lack of regulation has caused serious problems. That the private market screwed itself up and they need the government to come help them unscrew it.” House speaker Nancy Pelosi agreed, calling the bailout amount “just too enormous for the American people to guarantee.” Well yeah. We certainly don’t have that kind of money.
