http://money.cnn.com/

AIG announced Tuesday that it completed a deal wiping out $25 billion of its debt to taxpayers by selling stakes in two subsidiaries to the Federal Reserve Bank of New York.

The troubled insurer gave the New York Fed preferred shares of two of its international life insurance companies, including $16 billion of American International Assurance Co. and $9 billion of American Life Insurance Co. The deal was originally announced in March.

The deal brings the New York-based insurer’s debt to the New York Fed down to $17 billion. AIG also still owes the U.S. Treasury $44.8 billion from a separate Troubled Asset Relief Program (TARP) loan, so the insurer still owes taxpayers just under $62 billion.

so the Federal Reserve Bank of New York is using money created out of thin air thereby debasing and ultimately reducing the value of the currency, effectively taxing the public, to buy two subsidiaries of AIG (i’m assuming at far below market value otherwise it doesn’t make sense) which is already owned primarily by the government?

am i the only one confused with the math / logic behind this one?

Related posts:

1. President of the New York Federal Reserve Bank advocates global bank framework
2. Fed may take ownership stakes in US banks, Ireland takes over largest bank, AIG looking to borrow more
3. Lord Keynes would be proud: Federal Reserve System acting as world central bank to foreign central banks
4. Federal Reserve buys Treasury Inflation Protected Securities (TIPS)
5. Henry Kaufman: Federal Reserve led astray by libertarian dogma

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