Looks like we just bought AIG (the American International Group):
In an extraordinary turn, the Federal Reserve agreed Tuesday night to take a nearly 80 percent stake in the troubled giant insurance company, the American International Group, in exchange for an $85 billion loan.
The decision, only two weeks after the Treasury took over the quasi-government mortgage finance companies Fannie Mae and Freddie Mac, is the most radical intervention in private business in the central bank's history.
How does it go? Privatize the benefits, socialize the costs? Or "communism for the rich, capitalism for the poor"? In any case, note that the $85 billion loan has as collateral the very reason why the loan was given. It's so circular it makes my head turn a full 360 degrees.
It's hard to know what the government should do now, of course, because once firms are let to grow big enough in a very concentrated industry their downfall will hurt most everyone. That's why we used to have anti-trust regulations and such, but all those were diluted or ignored during the free-market decades.
I have written about the need for better regulations (or better rules of the game) for the financial markets before. This would be a good opportunity for the government to introduce them, would it not? In exchange for the help, I mean.