Thursday, September 18, 2008

The Fed Bails Out AIG

Shortly after the U.S. Treasury Department took over Fannie Mae and Freddie Mac (see our September 7 blog post), the Federal Reserve agreed to loan $85 billion to insurance behemoth American International Group (AIG). The buyout, which gives the U.S. government control of AIG, is detailed in the New York Times. You can read the Federal Reserve's justification for the move in its official press release.

For a more critical analysis of the Fed's latest action, check out TV/radio news program Democracy Now's Wednesday broadcast, in which host Amy Goodman discusses the AIG bailout with former investment banker Nomi Prins and University of Missouri Professor Michael Hudson. The interviewees mention that the 1999 repeal of the Glass-Steagall Act (1933) ended the mandatory separation between commercial banking and investment banking in the United States. This 1999 repeal they refer to is the Gramm-Leach-Bliley Act, and you can find a U.S. House of Representatives Conference Report about this act via GPO Access.

For additional resources (both governmental and non-governmental), we recommend that you check out our subject guides on Banking, Banks, and Credit Unions, Business and Economic Information, and Debt and Budget Information.

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