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John Wayne's Holster: Vultures Clean-up on Wall Street
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Wednesday, September 17, 2008

Vultures Clean-up on Wall Street


Photo Credit: Safaris Pictures

Another day, another take-over by the Fed!

This time its AIG (American International Group) - the world's largest insurance company.

The Fed announced yesterday that it, "will provide a two-year loan, take 79.9 percent of the New York-based company's stock and replace its management..".

And like the script goes, the taxpayers will pick-up the tab for the loan.

The government is lending AIG the money at a rate of about 11.5 percent. According to Marco Annunziata, an analyst at UniCredit SpA, " the 'punitive' interest rate on the loan makes it extremely clear that this is not a subsidy extended to keep the company afloat but rather a stranglehold that makes AIG unviable while ensuring that its obligations will be met. This is to all extents and purposes a controlled bankruptcy"

A controlled bankruptcy? In other words, the loan will give the company just enough time to sell of its assets, most likely at fire sale prices.

Expect the regular players (Goldman Sachs, JP Morgan, Citibank, Barclay's, etc) to be involved. They will descent on AIG like vultures on a rotting carcass.

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