For Immediate Release
What About the Least of These: Another Life Line Has Been Tossed to Big Business: The $85 Billion Government Bailout AIG
Statement from the Rainbow PUSH Coalition President and founder Reverend Jesse L. Jackson, Sr.
CHICAGO - As the government bails out the largest insurance company in the world, American International Group (AIG) - more and more people are asking, "what about the least of these?" asked the Rev. Jesse L. Jackson, Sr., president and founder of the Rainbow PUSH Coalition.
While throwing an $85 billion lifeline to AIG to keep it afloat and prevent a meltdown of the global markets, unemployment in the U.S. now stands at 6.1%, 9.5 million people. Unemployment for Black males stands at over 10.6%, over 8% for Latinos. Nearly 5 million people lost their jobs in August. Over 45 million are still without health care, over 8% of who are children. "Where is the lifeline for the least of these? What are our nation's priorities, and when will the poor receive the same comprehensive lifeline as the rich and powerful? When will it end, and more importantly, how many more of these big corporations can the federal government become stakeholders in?" added Rev. Jackson.
All of the actions which have been taken by the government in these recent weeks have been done to stabilize the economy. Rev. Jackson commented, "Inconsistency in policy raises uncertainty. Uncertainty leads to instability in the market place. Bailing out Bear Sterns, letting Lehman fail, Saving Fannie Mae and Freddie Mac, and saving AIG, and not lowering the discount rate, raises uncertainty. We have heard this argument before, but avoiding the massive foreclosures by restructuring and modifying loans remains the best hope of stabilizing the economy." Further, "Congress must put a focus on enacting laws that prevent discrimination and predatory lending that caused the crisis in the first place. The administration and Congress must give the same - if not more - emphasis on helping families on Main Street save their homes and avoid foreclosure, as they do in bailing out Wall Street."
Over 300,000 or one in very 416 households received foreclosure notices in August, up 12% in one month. An estimated 2.8 million U.S. households will face foreclosure by the end of next year.
Rev. Jackson said, "The US economy and, indeed, the global economy are in a massive downturn not seen since the Great Depression, with no end, and no solution, in sight."
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Senators Schumer, Brown, Menendez and Case's call for the government to institute a foreclosure moratorium relating to Freddie Mac and Fannie Mae's assets is a necessary bold step in the right direction. The financial services industry must be mandated to follow the lead of the Sheila Bair's leadership that is restructuring and modifying loans held by Indy Bank taken over by the FDIC. Clearly what has been needed and is even more required today is a program that mandates financial institutions to restructure and modify loans, and place a minimum six-month moratorium on home foreclosures.
This year, the Federal Reserve bailed out Bear Sterns. The Treasury just absorbed Fannie Mae and Freddie Mac, adding another $5 trillion directly to U.S. debt, and putting at risk some $200 billion directly. Today the Federal Reserve has promised to lend up to $85 billion to AIG. AIG is valued at $1 trillion. Taken into account this recent commitment will send the deficit over $500 billion this year. Meanwhile over $10 billion a month is still being poured into the unjust and immoral war in Iraq. "A change in our nation's priorities is needed now. We cannot wait. Economic stability must be at the forefront of the candidate's agenda," commented Rev. Jackson.
Under terms of this recent deal, the Fed will lend up to $85 billion to AIG, and the U.S. government will get an 80% equity stake in the insurer. The two-year loan will carry an interest rate of Libor plus 8.5 percentage points. The loan is secured by AIG's assets which is valued at $1 trillion.
Government spokespersons said that the move to save AIG "was necessary to protect the financial systems and the economy." AIG primary business is to insure the risk of banks and other financial institutions. If AIG were to fail, industry experts suggest that the banks, which they insure, would find it more difficult to raise capital because there would be no insurance for their risk. How ironic, that the insurer of risk has to be bailed out from its own risk.
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The Rainbow PUSH Coalition is a progressive organization devoted to protecting, defending and expanding civil rights to improve economic and educational opportunity. The organization is headquartered at 930 E. 50th St. in Chicago. To learn more, please visit www.rainbowpush.org or call (773) 373-3366. To arrange an interview with Rev. Jackson, please call the numbers listed above.