CE #1

AIG is a major insurance company for the United States. In the mid-2000s AIG had gone through a series of fraud investigations which led to a one and a half billion fine for AIG and criminal charges. AIG's share prices fell over ninety-five percent to just one dollar and twenty-five cents on September 16, 2008, from a high of about seventy dollars. The company reported over $13.2 billion in losses in the first six months of this year. They came into massive debt and the owners could not handle the cost. They were about to go bankrupt and then the US government stepped in.
This article talks about how the United States government stepped in and lent AIG Insurance eighty-five billion dollars. They used this money to pay off their debts and get their company back on the stock market. One crucial part of this transaction is that eighty percent of their company’s stocks are now owned by the United States government. AIG needed this money because they had invested almost all of its money in mortgages. The fall of the real estate value in turn was the cause of their fall. The government decided to step in because if AIG had failed it would set of a chain reaction throwing other companies “under the bus” so to speak and cause them to go into bankruptcy as well. This was interesting because this week the government allowed the Lehman Brothers, another large company, to fail, which is seen as an act to show all companies that they cannot always count on the taxpayer’s money for help. This takeover helped the Dow go back up about one hundred and forty-one points. This helped from the large drops of 504 point drop on Monday.
I heard about this all week and I decided to do my own research and I came across this article. I could not believe that the United States government would give a company eighty-five billion dollars, just to save the company. After reading this article I understand that if this one insurance company would fail then a lot of other companies that had their insurance with AIG would also go bankrupt. Also this move was to help the stock market and to slow the dow falling even more. We see this as job for the next President of the United States. This is not a job for the next president; this is a job for the people that are representing us in congress. They are the ones who control our economy and what companies can merge together. They are the reason our economy is failing and the American people should do something about it.