An AIG report to the Treasury Department last month warned that if the government didn’t come to its rescue again, its collapse would trigger a “chain reaction of enormous proportions” that would “bankrupt the entire system” and make it impossible for AIG to repay the billions it already owed the U.S. government. Four days later, AIG was given $30 billion in federal aid on top of the $130 billion it had already received . . .
The draft, obtained by ABC News, was marked “strictly confidential.” It said, “The failure of AIG would cause turmoil in the U.S. economy and global markets and have multiple and potentially catastrophic unforeseen consequences.”
As I wrote in Bailout Nation, almost everytime we hear the phrase “Systemic Risk,” we get our pockets picked. Systemic risk has become a buzzword — just the latest scare tactic. It is astonishing.
Full report below . . .
AIG Warned of ‘Crisis’ if Government Didn’t Help
Draft, Obtained by ABC News, Dated Four Days Before Bailout
MATT JAFFE and NED POTTER
ABC, March 9, 2009
AIG Told U.S. Failure May Cripple Banks, Money Funds
Hugh Son and Scott Lanman
Bloomberg, March 9 2009