Fed's AIG Takeover 'Like French-Style Capitalism'
The Federal Reserve said Tuesday it would lend American International Group $85 billion to help stave off a financial crisis worldwide. In return, the government received a major stake in the company, one of the world's largest insurers.
"It's almost like French-style capitalism here in the U.S.," says David Wessel, economics editor of The Wall Street Journal. He tells Steve Inskeep that AIG essentially has been "seized by the government."
But the government doesn't want to be running any more big financial institutions — like Fannie Mae and Freddie Mac, which it also took over recently — and will be looking to make money from selling off parts of the company, Wessel says.
Some of those parts appear to be solid and could be sold soon, Wessel says: "I do think it's important to note that people who have AIG insurance companies are OK, that there's a system set up for protecting policyholders overseen by the state of New York."
The big question is whether the government will have to lend to even more companies.
"This thing is a spreading stain on the financial system," Wessel says. "The stock of big investment bank Morgan Stanley was weak yesterday; Ford and General Motors have asked for federal aid. It's hard to say 'never' given the most extraordinary things that we've seen in the last few days, each one of which would've been a six-month crisis if they'd happened last year."
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