The Inconvenient Truth About AIG — You Haven’t Seen Nothing Yet

Mar 18, 2009 12:12pm

ABC’s Tom Johnson from New York:

The anger over the AIG bonus mess is raw.

We asked you whether AIG, given these bonuses, should get another cent of taxpayer bail out money.  You could practically hear the anger behind the posts.  Here is one somewhat representative comment.  And keep in mind it took some skimming to find one without an expletive.

"Absolutely not!!!!  Fire all of those incompetent idiots and give Main Street a bailout…"

So would now be a good time to raise an inconvenient truth? 

The Obama administration will soon have the sober task of convincing Americans that when it comes to bailing out troubled institutions like AIG and the big banks, we’ve got a lot more to do.

The administration and leading economists believe that in order to turn things around some banks will need more.  To get the economy moving again, to get lending flowing for you, me, small businesses, on and on, the banks need more taxpayer help. 

Team Obama will soon announce the details of their plan for the banks.  It will involve using the remaining $250 billion in that TARP fund set up by Congress to rescue the banks.  The money is a loan not a gift.  And there is expectation that the loans will be recovered…some day.  But no matter how you slice it, the price tag is going to rise.

When you consider the hundreds of billions dollars that have already gone out to these ailing institutions, the AIG bonuses are a drop in the bucket.  But judging from the mood, the bonuses will likely prove to be a big blow when it comes time to convince the American public that the banks need more help.   

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