American International Group (AIG) is the largest business insurer in the world. On September 16, 2008, the Federal Reserve agreed to extend an $85 billion bridge loan to keep the insurer from declaring bankruptcy and giving it time to improve its financial position. If it does not, well $85 billion’s not a lot, right?
If it is a smaller insurance company then the state government steps in an covers for it more directly- i.e. pays out it’s claims (although there is a variable cap).
Either way, the final translation is the same: YOU pay for the defaulted mortgage. YOU, the taxpayer. The one who more than likely paid an insurance premium on your own home as well.
2) Well- no big deal right? I mean just say that the market fails- first the house goes into foreclosure and they sell- then the insurance company only has to pay the difference right? That’s not a lot, right? WRONG.
Banks are not managing their properties properly- and why should they? They get the same amount of money either way (actually they might stand to lose a bit by properly managing them, I’m unsure if they’d get reimbursed for that). So they get damaged or run down, and as a result are selling for Way Way WAY less than the loan. And we are suffering, on several levels for that.
Do something about it. Say something about it. We have a thousand venues for using our voices, let’s get foreclosed property management regulated. There’s another round of foreclosures coming- taxpayers don’t need to pay for them as well.