I honestly don't know the answer to the question. But the deal is done for the Feds to bail out AIG, just like it did with Bear and Fannie and Freddie but not with Lehman or Merrill. At least the loan, once again made under the "unusual and exigent" clause of Section 13(3) of the Federal Reserve Act, is at 850 bps above LIBOR.
Where do you draw the line? Is Ford or GM a "national treasure," too? (Those are Hank Greenberg's words, not mine.) What about the airlines (again)? Or some other distressed company? The line was drawn in the sand and then changed. Why bail out the bondholders? Certitude would be nice. But again, even though I am a free-marketer at heart, maybe this one had to happen too. Unlike Fannie and Freddie, I don't know. Some say it had to be done to prevent a collapse, but others say that the Fed should have let the market take its course.
Apparently Steven Udvar-Hazy wants to buy back ILFC, the aircraft leasing unit he founded eons ago. He's got the team so that deal makes sense of the money's there to do it.
Yes, AIG did home mortgages and insured lenders on defaults as well. They did do some CMBS work, too, I guess. (Someone correct me if I am wrong.) But they sure have real estate holdings.
But the effect of all these deals, especially Lehman, will be more write-downs and hopefully some much needed portfolio transparency. Interestingly, the big fear seems to be home builders more than commercial property. (Lehman was known, however, for doing risky dirt deals.) And I think that's right. Another interesting development is that B-piece buyers in the few CMBS issuances out there are negotiating heavily to throw out any loan they think is a loser.
P.S. Check out the huge spreads right now -- wow.