September 17, 2008
What Does the AIG Deal Look Like?
Posted by David Zaring

I expressed skepticism, on basic administrative law principles, at the unprecedented "purchase" of AIG by the Fed.  But really, as Jeff Lipshaw has reminded me, we need to know how the deal was structured before we finally conclude that we are living in a lawless world of central banker supremacy.  And this press release suggests that the Fed both bought the company (and fired its CEO), and yet only took warrants and the whole of AIG as collateral in condition for its super-high-interest loan.  I'm inclined to think that for all intents and purposes the Fed as good as purchased the insurer, and really stretched its statutory powers to do so.  But of course it may have figured out a way to structure the deal so that it looks like a loan with lots of particularly onerous conditions attached - and that looks a little like something section 13 of the Federal Reserve Act might sanction.

The problem is that we need to see the deal to know which version of events is correct.  And I don't think it has been made available.  In the name of open government, wouldn't it be great if the Fed showed us what it did instead of just describing it to us, and telling us things like the taxpayers will be protected?

Anyway, check out these excellent pieces of commentary on AIG.

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