It's clear that there is no more bailout money left in the public trough. Taxpayers have done enough. But there are still companies in need of a lifeline. Hence the Fed-directed $70 billion bailout facility that top banks have agreed to. Hence also the plans by Goldman Sachs and JPMorgan Chase to bail out AIG with another $75 billion in credit, as reported by the New York Times. AIG has been downgraded, and likely will face soaring collateral requirements that threaten the firm. Few details are known. But this is an extraordinary development. Out of public money but still averse to financial chaos, the Fed is nevertheless dictating a lot. Goldman Sachs and JPMorgan Chase have held up well, but $75 billion is a lot. What if they say no? Is that really an option? And if they go forward with the bailout plans, are they in a position to call in a chit later? Are there any quid pro quos that ought to be disclosed? These are important issues that are perhaps outweighed by events. Certainly, we're in some tricky regulatory waters.  

For more on AIG:
- here's the New York Times article

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