>>
http://www.democracynow.org/2008/9/17/us_seizes_control_of_aig_with
>>
http://www.democracynow.org/2008/9/17
>>
http://en.wikipedia.org/wiki/Glass-Steagall_Act
>>
>> ...NOMI PRINS: The bailout of AIG is an example of the government
>> having to step in and clean up a mess. It is not so much that subprime
>> mortgages fell and that caused some losses to AIG. AIG was acting not
>> simply as an insurance company; it was acting as a speculative
>> investment bank/hedge fund, as was Bear Stearns, as was Lehman
>> Brothers, as is what will become Bank of America/Merrill Lynch. So you
>> have a situation where it's bailing out not just the money, but taking
>> on the risk of items it cannot even begin to understand, because if it
>> had understood them, this would never have gotten to the point to
>> which it has gotten.
>>
>> AMY GOODMAN: How did it get to this point? How did it go beyond
>> insurance?
>>
>> NOMI PRINS: In AIG and in Lehman and with Merrill and every other
>> company on Wall Street that has faltered or is faltering, it's about
>> taking on too much leverage and borrowing to take on the risk and
>> borrowing again and borrowing again, twenty-five to thirty times the
>> amount of capital, the amount of money that they had to basically back
>> the borrowing that they were doing. Human regular borrowers cannot do
>> this. This is something that is an item only of the banking industry.
>>
>> And not only was all that borrowing happening, but there was no
>> transparency to the Fed, to the SEC, to the Treasury, to anyone who
>> would have even bothered to look as to how much of a catastrophe was
>> being created, so that when anything fell, whether it was the subprime
>> mortgage or whether it was a credit complex security, it was all below
>> a pile of immense interlocked, incestuous borrowing, and that's what
>> is bringing down the entire banking system.
