Comments on: AIG Bailout http://www.ritholtz.com/blog/2009/03/aig-bailout/ Macro Perspective on the Capital Markets, Economy, Geopolitics, Technology, and Digital Media Tue, 14 Feb 2012 10:33:19 +0000 hourly 1 http://wordpress.org/?v=3.0.5 By: Moss http://www.ritholtz.com/blog/2009/03/aig-bailout/comment-page-1/#comment-155890 Moss Sun, 22 Mar 2009 16:40:59 +0000 http://www.ritholtz.com/blog/?p=20582#comment-155890 I think all speculative CDS contracts should be handled as suggested above. This is the uncertainty that is spooking everybody not what Treasury or the Fed may of may not do. I think all speculative CDS contracts should be handled as suggested above.
This is the uncertainty that is spooking everybody not what Treasury or the Fed may of may not do.

]]> By: CNK http://www.ritholtz.com/blog/2009/03/aig-bailout/comment-page-1/#comment-154988 CNK Thu, 19 Mar 2009 14:58:28 +0000 http://www.ritholtz.com/blog/?p=20582#comment-154988 I believe the Bailout should be done in the following way; 1. If the AIG Counter Party was actually Hedging a position then AIG Bailout money would support that instrument by the Counter Party passing over the instruments to AIG. 2. If AIG Counter party was actually just speculating (NO hedging of a position) then he would just receive the amount of premium paid to AIG. Typically AIG charged 1% rate on line so that would be the payment to the Counter Party. If AIG had gone into Bankruptcy Court there is a good chance that those Counter Party speculators would have received nothing. I believe the Bailout should be done in the following way;

1. If the AIG Counter Party was actually Hedging a position then AIG Bailout money would support that instrument by the Counter Party passing over the instruments to AIG.
2. If AIG Counter party was actually just speculating (NO hedging of a position) then he would just receive the amount of premium paid to AIG. Typically AIG charged 1% rate on line so that would be the payment to the Counter Party.

If AIG had gone into Bankruptcy Court there is a good chance that those Counter Party speculators would have received nothing.

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