A nice off-balance sheet play by the Feds.
by thecorporatecounsel.net blogSome members wonder why the Federal Reserve only purchased 79.9% of AIG - was there any magic to it not going over 80%? As noted in this DealBook blog by Prof. Davidoff, the government can't purchase more than 80% of a company "because if it goes over the magical number of 80 percent, the company’s debts are then required to be consolidated onto the federal government’s balance sheet. Keeping it at 79.9 percent allows the government to maintain the fiction that it is still not responsible for the company’s solvency." Thanks to Tom Conaghan of McDermott Will for tracking this down.
A nice off-balance sheet play by the Feds. I guess they are trying to be like Enron. Maybe they should rename Fannie Mae "Raptor 6" and AIG "NOSLAUP II, LLC" (ie. "Paulson" spelled backwards).
Anyways, I can't wait to see the Fed file their Schedule 13D and all of their Section 16 reports
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