Bloomberg excerpts:
“As an insurer, American International Group Inc. didn’t qualify for the Federal Reserve’s crisis-lending programs for banks. So when trading partners squeezed AIG for liquidity in 2008, the Fed gave the New York-based company two credit lines all its own, with a combined borrowing capacity of $122.8 billion.
AIG’s balance under the credit lines reached about $90 billion in October 2008, data show. By then, the U.S. Treasury Department had taken over AIG, making about $70 billion of separate capital injections during the crisis.
In January 2009, the company borrowed $16.2 billion from the Fed’s Commercial Paper Funding Facility. Bloomberg didn’t include the credit lines in its Fed-loan ranking because they weren’t available to a range of institutions and the borrower was never kept secret.
Peak amount of debt on 1/27/2009: $16.2B
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AIG FP (AIG Financial Products) raked in billions of dollars selling credit default swaps (CDS) during the housing boom. Their risk management strategies during this ‘boom’ period were not given the priority status they deserved. And they failed to set aside adequate “reserves” to cover the potential of a hard down-turn in the market.
That hard down turn arrived when the housing bubble popped in 2007. And when thqt default wave hit, AIG FP was sitting on $450 billion in CDS contracts. They could not ‘cover’ their counterparty obligations to major fiduciary institutions like Goldman Sachs, Societe Generale, and many others. And those counterparties did not adequately verify that AIG had the unwalled reserves necessary to cover their massive exposure.
And so the Fed stepped in and
covered those obligations – 100 cents on the dollar.
Note: The Fed “gave the New York-based company [AIG] two credit lines all its
own, with a combined borrowing capacity of $122.8 billion.”
The Fed literally bailed out a ‘high-roller’ gambling operation. At the same time, suffered enormous economic consequences as the credit crisis snowballed – losing income and jobs. Over 12 million American families lost their homes.
If the Fed can fire-hose AIG with billions of dollars in instant liquidity, then Fed can also grant U.S. citizens equal access to direct liquidity transfers.
It is now time for the Fed to activate one more new credit facility, a U.S. Citizens Credit Facility, to restore financial health for American families and revitalize economic growth in this great country..
The Leviticus 25 Plan is a dynamic economic initiative providing direct liquidity benefits for American families, while at the same time scaling back the role of government in managing and controlling the affairs of citizens. It is a comprehensive plan with long-term economic and social benefits for citizens and government.
The inspiration for this plan is based upon Biblical principles set forth in the Book of Leviticus, principles tendering direct economic liberties to the people.
The Leviticus 25 Plan – An Economic Acceleration Plan for America
$75,000 per U.S. citizen – Leviticus 25 Plan 2018 (3083 downloads)