In our first quarterly report of 2008, we proposed “Ride The Storm” as phrase of the year, and discussed how aggressive Fed rate cuts and higher conforming loan limits might “break the storm clouds” in mortgage and financial markets.

Back on October 9, AIG added $38b to their $85b Fed loan. Today the government bailout of AIG has been completely restructured and greatly increased. It involves help from the Treasury under the Troubled Asset Relief Program, and also help from the Fed that comes in multiple tiers. Most notably, the Fed’s original loans to [...]

To make good on an announcement earlier this month, the Fed has completed the first few days of

Four days ago, AIG had used $61b of it’s $85b Fed loan to meet cash needs in the short term and buy time for them to sell off some divisions of the company to raise longer-term money and regain some stability. Today, the New York Fed allowed AIG to tap $37.8b for additional short-term liquidity:

The NY Times reports that AIG has used $61B of its $85b Fed loan. And the Financial Times reports that, as they sell divisions to pay back the loan, AIG revenues could be cut in half by asset sales. In mid-September, AIG came under extreme short-term pressure as an untold number of claims on credit [...]

We’ve said before that Gretchen Morgenson of the NY Times is perhaps the only major journalist covering credit default swaps with any level of detail. She’s been covering this issue and this weekend, she continues with a large piece on how AIG got so wound up in the derivatives mess. Worth a read.

The $700b government bailout package for the financial sector has taken center stage, but it was only two weeks ago that AIG was hogging headlines as they were poised to topple. The Fed’s $85b subprime-like loan to AIG saved them…or at least bought them time to raise money. The big talk two weeks ago was [...]

On Friday afternoon, Treasury Secretary Henry Paulson briefly outlined his proposal for helping banks move through the credit crisis that began in summer 2007 and flared up significantly in the last 60 days. The proposal says that all Americans are at risk:

Here’s a more detailed version of the Fed’s AIG bailout to follow up our previous post. Quick review: On Monday it was thought that AIG, the world’s largest insurer, needed about $40 billion to meet a wave of claims on credit default swaps and other obligations. The logic went that this would be a bridge [...]

I was lying awake the other night, worrying about all of the debt on my credit card. The jet ski, mink socks, the ATV, my new plasma TV, ruby encrusted dog food bowl, surround-sound stereo – they are great, but darn they cost a lot. And then it dawned on me: it wasn’t my fault! [...]