Saturday, October 2, 2010

NYTimes Alters and Sugar Coats AIG Repayment News

Final article: "A.I.G. Reaches Deal to Repay Treasury and Fed for Bailout":
A.I.G.’s exit agreement, announced Thursday, includes a number of steps that must be taken by early 2011, when the Federal Reserve Bank of New York will officially sever its ties to the company and the Treasury Department will expand its stake to 92.1 percent, then convert all of its preferred shares to common.

For many months if not years afterward, the Treasury will retain an A.I.G. exposure as it slowly sells off its stake on the public markets. A rapid sell-off would spoil the taxpayers’ recovery by driving down the share price.

The exit plan does leave open the possibility that the taxpayers will ultimately be made whole for the assistance they extended to A.I.G., by far the most offered to any nongovernmental company during the financial crisis of 2008. But taxpayers could end up in the red if A.I.G.’s stock price falls before the Treasury can finish selling its shares. Market-moving events, like big jury awards or hurricane losses, are at the heart of the insurance business.

Treasury officials said that as long as A.I.G.’s stock remains above $28.75, they will consider the taxpayers to be in the black on the company’s bailout. The stock closed Thursday at $39.10.
Pretty amazing if the company actually pays back everything. Oddly, the NYTimes article was originally very different, as noted here:
A.I.G. has been busy at the Glenn Beck Chalkboard, devising a plan to repay American taxpayers the hundreds of billions of dollars it borrowed all those many years ago. Hooray! According to the New York Times, “Under the plan, the Federal Reserve Bank of New York would be repaid the nearly $20 billion that it is owed and the Treasury Department would convert the $49.1 billion in preferred stock that it holds into 1.66 billion common shares. Over all, A.I.G. received a bailout package of nearly $180 billion.” Wait, what? What about the other $160 billion? Good grief. [NYT]
The final NYTimes piece does NOT have the quote about the actual price of the $180 billion AIG bailout-- kind of important info. That info appears in this more obscure NYTimes blog post.

So, to recap, the NYTimes originally writes up the AIG repayment agreement and notes the actual USGovt price tag-- then later completely edits that out! I wonder who was behind this sugar-coating.

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