Those foreign banks bet that AIG would be around. They should have been wrong about that and lost their insurance premiums on derivatives contracts they entered into with AIG. The US taxpayer should not be expected to make AIG counterparties whole.
Why should taxpayers buy assets of very questionable value? They shouldn't. Banks will not lend more than they currently are because there aren't enought qualified borrowers in this economy.
Wow! The United States is moving the diplomatic initiative forward with Iran. As a step toward political engagement and dialogue, this is historic and unparalleled in recent history!
Finally, the real story comes out. $170B went in the front door at AIG in a government bailout and $100Billion USD goes out the back door to AIG conterparties in the derivative contracts other companies, including some in other countries, entered into with AIG. We will hear a lot more about this story in the future. Who will go to jail for this? Paulson? Geithner? Bernanke? WOW! Sure those were contracts but they were also investments and those other parties knew there was conterparty risk they took when they entered into those contracts with AIG. In exchange for a large insurance premium up front paid to AIG, the counterparty was insured against losses on underlying investments. Those companies took the risk that their losses were being guaranteed by the insurance company calling itself American International Group (AIG). They were never guaranteed by the good faith and credit of the US government and the American people. Paulson et. al. changed the terms of the contract. Those other counterparties should have lost their premiums. They took the risk and they should have lost the bet.