Monday, March 16, 2009

A voice from overseas:

The Telegraph:
[Headline] European banks have nothing to apologise for over AIG bail-out

US indignation at the bankrupt-and-bailed-out insurer’s record is understandable, as is fierce debate about how AIG was rescued. But non-US banks – which together received $60bn from AIG – have nothing to feel guilty about.

Some in Washington are already singing the predictable tune: US taxpayers’ money was used to bail out European banks. But the decision to bail out AIG meant such uses of cash were inevitable: either a bailout makes good on valid contracts, or it doesn’t. ...

Once the bailout decision is made, and the funds are in, the rescuer doesn’t get to choose which obligations are honoured. That’s especially true for AIG. The whole point of the rescue was to keep the mega-insurer from defaulting on its obligations. ...

What this means is that AIG honoured its contracts. Whether it should have signed those contracts in the first place – or been bailed out subsequently – is another debate altogether.

European banks simply did what it was their duty to do. Where AIG got the money from didn’t matter. Foreign banks aren’t the custodians of US taxpayers’ funds.


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