Q: Did Congress bail out AIG because it insures members’ pensions?
A: This widely e-mailed claim is a hoax. It actually was the Federal Reserve that bailed out AIG, not Congress. And federal pensions aren’t insured by AIG or any other company.
FULL QUESTION
Have you checked this?
Remember when this economic crisis hit, and Congress let Bear Sterns go under, pushed a bunch of forced marriages between banks, etc.?
Then they bailed out AIG. At the time, I thought: "That’s strange.
What does an insurance company have to do with this crisis?"I think I just found the answer. Among other things, AIG INSURES THE PENSION TRUST OF THE UNITED STATES CONGRESS!!
No wonder they got bailed out right away!
FULL ANSWER
American International Group Inc. was the recipient of a government "bailout" of about $85 billion back in September of last year. But the loan that was extended to the failing insurance company was not the work of the U.S. Congress. The deal was brokered by the Federal Reserve with the backing of the Treasury Department. In fact, some members of Congress were not at all supportive of the deal.
Furthermore, the decision to lend the company money could have nothing to do with pensions for members of Congress. AIG does not insure the pension trust fund that covers members of Congress and other federal employees. AIG spokesman Peter Tulupman dismissed the claim as "an unsubstantiated rumor." And Kathy McGettigan, deputy associate director of the Office of Personnel Management’s Center for Retirement and Insurance Services, told FactCheck.org: "No one insures that fund. The fund’s assets are backed by the earned benefits of [federal] employees. The fund itself is not insured."
-D’Angelo Gore
Clarification, Feb. 12: In early November, the Federal Reserve announced a restructuring of its support of AIG. The U.S. Treasury Dept. purchased $40 billion of preferred shares of AIG, reducing the Fed’s bailout to $60 billion. The money the Treasury used came from the Troubled Asset Relief Program, which Congress had passed Oct. 3, 2008. But Congress didn’t stipulate where the money would go. It was the Treasury’s decision to give $40 billion to AIG.
Sources
Andrews, Edmund L., Michael J. de la Merced and Mary Williams Walsh. "Fed’s $85 Billion Loan Rescues Insurer." New York Times, 16 Sept. 2008.
Office of Personnel Management. "Agency Financial Report: Fiscal Year 2008."