AIG (AIG) To Investor: We Don't Want Your Money. We'd Rather Have a Fed Bailout

It appears that Wall Street’s latest disaster, AIG (AIG), just made exactly the same mistake as Lehman Brothers: It refused to sell a stake at a price it deemed usurious–and now appears it might go under as a result.  Unlike Lehman, however, AIG appears to have waited mere hours before running to the Fed with its hand out:

WSJ: When AIG’s board rejected the capital infusion [from J.C. Flowers this weekend], the company’s recently appointed chairman and chief executive, Robert Willumstad, took the extraordinary step of reaching out to the Federal Reserve for help. Mr. Willumstad asked New York Federal Reserve President Timothy Geithner if the Fed could backstop some asset sales…

AIG viewed the request to the Fed not as a bailout but rather as a temporary measure that would give the insurer some breathing room until it was able to dispose of the assets.

As of late Sunday, the Fed had yet to decide whether to offer the assistance. The Fed usually deals with banks and brokers, and it wasn’t clear what it could do. An AIG spokesman had no comment.

The Fed may not draw the line with AIG’s request for support as clearly as it has with Lehman, distinguishing between its lending programs and the use of taxpayer funds. But any Fed action to help the firm still would have a high bar. Central bank officials took an extraordinary step in expanding the discount window to securities firms earlier this year. Expanding it to other firms would be another big step, though it could be considered if a case can be made for how such a lending lifeline would be critical to overall financial stability.

Let them fail, Hank and Ben! Let them fail.

See Also: AIG: Oops. We Just Made The Same Mistake As Lehman Brothers

Business Insider Emails & Alerts

Site highlights each day to your inbox.

Follow Business Insider Australia on Facebook, Twitter, LinkedIn, and Instagram.