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« Chase Coffman Stiff-Arms 5 Nevada Players | Main | Ouch. »

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William Polley

The Fed is not going to run an insurance company. The Fed is providing a backstop while AIG sells its assets. If they didn't, the money market (which people rely on as being a safe harbor) would be in chaos and the damage to the system would be severe and long-lasting.

A lot of money market mutual funds held shares of AIG. They will quite properly take a bath on this, so don't think they're getting off easy. But it would be even worse for the innocent bystanders if they had defaulted or had their payments suspended by a bankruptcy filing. Much worse.

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