I know I am a strong advocate of not bailing out companies, and I have been pretty straightforward about that. Why must we continue with AIG though? The last time we gave them money they spent a six figure sum to treat their executives to a lavish retreat. Now they are trying to take more of my hard earned money to do it again? 

I know this is an extreme example but here it goes. If you have a gambling problem, and you lose all your money. Do you go to your parents and ask for free money to fix your issues? Probably not, but for the sake of argument say they agree and give you all the money you lost back with no strings attached. Have you learned your lesson about gambling? If you said yes you are lying to yourself. It does not work in any other scenario, it will not work in this one.

The U.S. government reached a deal Sunday night to scrap its original $123 billion bailout of American International Group Inc. and replace it with a new $150 billion package, according to people familiar with the matter. While the arrangement stands to considerably ease terms on the faltering insurer, it gives the government an unprecedented role as an actor in financial markets…Under the terms ironed out late Sunday, the government would give AIG more money, including $40 billion from the U.S. Treasury’s $700 billion Troubled Asset Relief Program. It would also receive less interest than on the bulk of the original loan, while freeing AIG from exposure to some of the risky financial instruments that nearly caused it to file for bankruptcy protection.

The $150 billion in government aid consists of a $60 billion loan, a $40 billion preferred-stock investment and $50 billion in capital largely to purchase distressed assets which are to be placed into two separate financing entities.”