Saturday, May 17, 2014

An AIG Bailout Question

Cameron Johnston emails:
 I just heard the republican candidates governor of CA debate between Neel Kashkari & Tim Donelly on the John & Ken Show AM 640 yesterday.  It was brought up that Kashkari previously worked for the treasury department under GW Bush during the financial crisis and that he was responsible for bailing out the big banks with TARP.  He claimed that it saved the economy and that the banks paid back the tax payers and actually returned a profit.  I know that is is nonsense and it was typical that nobody challenged him on this statement.

But my question is this:  Can you recommend a good source/articles that explain exactly how AIG was able to "pay the government back everything, plus a profit of more than 22 billion (as they claim)?  I don't really understand how they went from being on the verge of taking the entire financial system down to "paying everything back" within just five or so years.  What am I missing here?
I discussed this in December 2010: Geithner's Guide to High Finance

The best overall insight into the bailouts and why they did not have to occur is in David Stockman's book, The Great Deformation: The Corruption of Capitalism in America, pp. 3-52.

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