According to Moody’s Investors Service, AIG may actually be able to pay back its loans from the government. The company posted its second straight quarterly profit last week thanks to a recovery in the value of investments.

Moody’s said that as long as the operations of AIG and other markets continue to get better and stabilize, then they will likely be able to repay the government with heavy government support in its restructuring plan.

With the government now likely to recoup its investment, it has incentive to continue supporting AIG and its various creditors, Moody’s said. The agency affirmed AIG’s long-term rating of A3, the seventh-highest investment grade, with a negative outlook.

Credit spreads on AIG’s 8.25 percent notes due in 2018 tightened by 15 basis points on Tuesday to 751 basis points over U.S. Treasuries, according to MarketAxess.

Over the past year, AIG has taken more than $180 billion in financial aid from the government. Eighty percent is currently owned by taxpayers in the United States. While AIG is looking for someone to buy major assets, it is having a very difficult time finding anyone to buy from them.

I am actually surprised to see any company saying that AIG will be able to pay back the better part of $200 billion to anyone…especially from a company that went nearly bankrupt.

I don’t see why anyone would spend their time investing in a company like this. I sometimes wonder if the government knew what they were getting themselves into with AIG if they would have lent the money to them without and major consequences (remember executive retreats and those outrageous bonuses?).

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According to U.S. Treasury Secretary Timothy Geithner, the Federal Reserve should lose its ability to bail out “big, failing financial firms like AIG and Bear Stearns.”

He said, “Any firm that puts itself in a position where it cannot survive without special assistance from the government must face the consequences of failure. The proposed resolution authority would not authorize the government to provide open bank assistance to any failing firm.” He went on, “We cannot put taxpayers in the position of paying for the losses of large private financial institutions. We must build a system in which individual firms, no matter how large or important, can fail without risking catastrophic damage to the economy.”

Many taxpayers would agree with Geithner, while many of the banks would likely not. I have to say that I do agree with him to a point definitely. With as much money as we, as American citizens, have invested in these companies, we should be able to control them a bit better than they are now (for example, we should definitely have been able to do something about the grossly overpaid executives at AIG). However, once we start controlling the companies, people start screaming about how it is not right in a free market system.

Geithner suggests that large firms that are failing should be received by the FDIC and then it can decide whether to “unwind, dismantle, sell or liquidate.” If these companies should so choose to liquidate, then they can be purchased by other companies or they can be broken into many other branches.

The main reason why I feel like this is such a good idea is that I think that companies should be held responsible for their actions. Like the picture posted above (which I know I posted as a funny post a week or so ago), these banks are allowed to steal and “plunder” and still be able to escape with all their loot. It is not the way a company is supposed to be run. These companies should have been forced to figure out a way to liquidate or sell from the beginning. Allowing them to continue to operate with the taxpayer’s money is absolutely insane. Particularly when you consider companies that took BILLIONS (like, AIG). Those companies will never be able to pay back that money.

At least when the government bailed out the car companies, there were hundreds of thousands of blue collar workers that were benefiting because they wouldn’t be losing their jobs. At the same time, the executives of those companies weren’t taking outrageous salaries either. It is as though the financial companies that took the bailout money do not run on the same system. It is just absolutely ridiculous how out of control the whole thing got.

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Ever wonder what the difference between bankers and pirates are? This little image I dugg is pretty funny in regards to the topic.

Banks have been letting their own companies fail for the past year and the only thing that saves them every time is the government. Unfortunately, the goverment is nowhere to be seen in the image.

It’s good to have a laugh at the expense of banks and the people who run them because, after all, they are the ones who took our taxpayer money and some (like AIG) won’t ever be able to pay it back. I think that the government should take AIG and split it into a lot of different branches then dissolve the non profitable branches. It would be like firing your under-producing employees, it happens.

Image source: Politico

It’s been almost a year since the government started bailing out banks and already it is started to see some profits from the money given to all the banks. At the time of the bailouts, many people thought that profits from the money put into the banks would never be seen, but now we’re all a bit taken aback by the profits the government is already seeing.

The government has started to get profits from the eight largest banks that were bailed out. The banks have fully repaid their loans from the government.

Of course, there wasn’t any word on the other hundreds of billions of dollars that were given out and now the FDIC, which is an insurance company that is subsidized by the government, is running out of money from buying up banks that have failed. The government is still facing huge losses from all the bailed out banks and especially from AIG, Freddie Mac, and Fannie Mae. Of course, the bank bailouts don’t include the huge loans given out to GM and Chrysler.

Still, the news coming out that some of the money given to the companies has turned from a worry-some loan to a bit of a profit is welcomed and surprising news.

Government bailouts were not something that was looked at as a very smart choice for the government to make concerning the banking (and automaker) industry. However, it looks like some of the bailouts are actually panning out and doing better than the government could have expected. It was really hoping for 5% on its money, but the 15% that has been gained by the time of this recent news release is a surprise even for those in the government.