{"id":341,"date":"2009-03-18T13:41:37","date_gmt":"2009-03-18T17:41:37","guid":{"rendered":"http:\/\/000af36.netsolhost.com\/wordpress1\/2009\/03\/18\/obama-explains-the-need-to-bail-out-aig\/"},"modified":"2009-03-18T13:41:37","modified_gmt":"2009-03-18T17:41:37","slug":"obama-explains-the-need-to-bail-out-aig","status":"publish","type":"post","link":"http:\/\/griendling.com\/wordpress1\/2009\/03\/18\/obama-explains-the-need-to-bail-out-aig\/","title":{"rendered":"Obama Explains the Need to Bail Out AIG"},"content":{"rendered":"

I have argued here<\/a> and here<\/a> that Obama needs to do a better job of explaining how we got into this financial mess, how his policies will get us out of it and, most important, how we prevent a repeat in the future.<\/p>\n

A little while ago, the president gave an impromptu press avail and made a small, but good start.  I don\u2019t have the video just yet.  But when he was asked if he could explain to the American people why it\u2019s important that taxpayers bail out AIG.  Here is a summary of what he said:<\/p>\n

AIG issued a lot of insurance policies to banks against losses for the bad investments they made.  Once those investments went south, AIG was forced to pay, but it hadn\u2019t enough capital.  If AIG was then allowed to go bankrupt and not pay the banks, those banks would have failed and the investments of many Americans in those banks \u2013- through their 401k\u2019s and pensions — would have been decimated.  Small businesses would also not be able to tap into credit lines to keep their businesses going.<\/p>\n

He then explained that it was critical that moving forward that financial institutions and those who issue insurance policies have more capital, so that if they are forced to pay out, they can do so without going under.  In other words, they need a better asset backing for the insurance policies.<\/p>\n

All in all, it was a good start.  Here\u2019s how he could have improved upon the explanation:<\/p>\n