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Megan McArdle

Megan McArdle - Megan McArdle is a senior editor for The Atlantic who writes about business and economics. She has worked at three start-ups, a consulting firm, an investment bank, a disaster recovery firm at Ground Zero, and The Economist. More

Megan was born and raised on the Upper West Side of Manhattan, and yes, she does enjoy her lattes, as well as the occasional extra-dry skim-milk cappuccino. Her checkered work history includes three start-ups, four years as a technology project manager for a boutique consulting firm, a summer as an associate at an investment bank, and a year spent as sort of an executive copy girl for one of the disaster-recovery firms at Ground Zero … all before the age of 30.

While working at Ground Zero, Megan started Live From the WTC, a blog focused on economics, business, and cooking. She may or may not have been the first major economics blogger, depending on whether we are allowed to throw outlying variables such as Brad Delong out of the set. From there it was but a few steps down the slippery slope to freelance journalism. She has worked in various capacities for The Economist, where she wrote about economics and oversaw the founding of Free Exchange, the magazine's economics blog. She has also maintained her own blog, Asymmetrical Information, which moved to The Atlantic, along with its owner, in August 2007.

Megan holds a bachelor's degree in English literature from the University of Pennsylvania and an M.B.A. from the University of Chicago. After a lifetime as a New Yorker, she now resides in northwest Washington, D.C., where she is still trying to figure out what one does with an apartment larger than 400 square feet.

Should the Fed start bailing out insurers?

By Megan McArdle
Sep 15 2008, 9:45 AM ET Comment

So AIG is applying to the Federal Reserve for bridge financing to allow it to enter a restructuring deal with KKR.  AIG got itself into big trouble writing credit default swaps for the mortgage market, and is now facing massive losses on Hurricane Ike.  That the Fed is even considering the move shows just how much the lines between different types of financial firms have blurred in this brave new world of novel financial instruments and megamergers.

Ben Bernanke is in a tough place.  Opening the loan facilities to the insurance business will further strain a loan portfolio already crammed full of risk--just as the Fed has announced that it will start accepting equity as collateral.  But if AIG doesn't restructure, it may have to start dumping its massive asset portfolio.  This, of course, will further erode the value of the securities held by solvent banks, meaning that more of them will likely show up at the Fed's discount window with their beggar's bowls out.

This is where I'm supposed to end with a snappy, sure summation of what the Fed should do.  But all I know right now is that I'm sure glad I don't have Ben Bernanke's job.


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