How the AIG bailout affects you

[0:16]" Woke up this morning thinking they were against the bailout before they were for the bailout. I think you you have a situation here with Lehman Brothers this other company. They decided they needed to make clear the banks are having trouble and you know you're having trouble we're not going to be there for you need to work this out. In the case of AIG it's very different it's not invest -- bank demise it's it's the difficulties that it had happened so fast similar to Bear Stearns back in. In March that the government I think felt it was necessary step in. To do what ever it could to try and give the companies and stability because if it have collapsed. Really you would have seen banks across the globe perhaps have to write down even more losses and that could cause greater disruption in the -- global markets."

[1:02]" help us understand how is if it if it is any different. What they did with -- AIG different from what they did for Fannie and Freddie."

[1:09]" Well Fannie and Freddie -- the government came in and it really took over control of it. Put it into a conservative ship it will have a lot greater access. And direction of it. At the two are similar there are some legal differences within you know in the case Fannie and Freddie the government is actually going to be purchasing. Some of the year mortgage backed securities that Fannie and Freddie -- put out there but in the cases of AIG what they're really doing the providing a loan to the company. And that AIG takes any of that money as the way things stand right now they would pay about 11% interest. After the federal government and the whole idea here is that AIG needs to get themselves right they have about two years to do this. That may include selling different assets they need to do whatever it is to make their balance -- stronger. So it's a little bit different. But I think that difference may be lost an average taxpayer is -- is that the bail out."

[2:03]" Yeah I do an end of -- also what happened to a Bear Stearns. When the uncle Sam sort of underworld the acquisition of that form yet IEA JPMorgan."

[2:13]" That was a forced sale really the Bear Stearns to JPMorgan at a bargain basement price and it it was able to go through by the government saying you know at 29 billion dollars in. As securities investments you have will back those options they go bad in the hope is that that they won't go about it we will be on the hook for."

[2:39]" Exactly and and you know they were definitely involved in the talks and trying to figure out what exactly to do with AIG because they've they are so little means -- these two gentlemen are. Are really in large degree the stewards of the economy right now especially the time when congress is cut open elections in there maybe some concerns about. Whether or not legislation can be passed in time to sort of deal with situation where."

[3:02]" Now if the AIG shares become worth more. Will the taxpayers benefit will will large stake is after all it's our money this 85 billion dollar line of credit who will our state could improve."

[3:15]" Theoretically yes and you know the idea also is that. We could be making money from AIG from the interest payments that it makes. You know that the government will say that they are doing whatever possible to secure taxpayer dollars and make sure that the taxpayers are not at risk and that does money won't be lost. Do what we'll have to see is just how things play out in a way of saying we -- the government. We're stepping in we're giving you are good credit are are backing our our help and we're looking long term 235 years out. With the idea being that as things in this stabilized the coming in trying to stabilize the market. Everything will get better and whatever money they may be made it may be down the road. We will will standard benefit and when the savings and loan crisis happen. And the resolution trust corporation was created to basically take over the savings and loans and dispose of them. You know in the end I think the government actually was able to make some profit from from what happened but at -- at the time -- was still extremely costly to the the treasury."

[4:13]" And as some people are suggesting that a sort of modern. RTC be created -- we get rid of all the deadwood in this instance and that's my final question -- Charlie -- Is there another shoe to drop woman what next big hedge fund."

[5:16]" Exactly and people have more questions there's all sorts of ways -- I'll look at your money in the bank to try and make it secure the best Jessica was the FTSE web site."

[5:24]" Charlie -- his ABC business senator thanks for its -- thank you."