...for AIG, which is reportedly close to a second bailout loan - this one smaller ($60 billion rather than $85 billion for the one it replaces) but with a longer maturity, and, crucially, without the punitive Libor plus 850bp interest rate. Felix Salmon has spotted something in the description:

Securities lending is meant to be a no-risk operation. In a repo operation, the long-term owner of a stock -- in this case, AIG -- will sell it to someone who wants to short it, and charge them interest. They then subsequently buy back the stock at the price they sold it for; the interest is pure profit.

AIG, however, seems to have gotten spectacularly greedy. It took the proceeds from the stock sales, and instead of putting it somewhere safe, invested it in RMBS. Which are now worth 50 cents on the dollar.

Meanwhile, the Washington Post has spotted something that went almost unnoticed at the time - a $140 billion tax exemption for merging banks. There used to be a limit on writing off previous years' losses against this year's profits for tax purposes - specifically, there was a limit to the extent you could do it with the losses made by a company that you have since acquired. (Otherwise you could buy loss-making companies really cheaply, simply in order to write off your profits against their losses, and come out well ahead of the game).

Well, not any more.

The sweeping change to two decades of tax policy escaped the notice of lawmakers for several days, as they remained consumed with the controversial bailout bill. When they found out, some legislators were furious. Some congressional staff members have privately concluded that the notice was illegal. But they have worried that saying so publicly could unravel several recent bank mergers made possible by the change and send the economy into an even deeper tailspin...
Lawmakers are now looking at whether the new notice was introduced to benefit specific banks, as well as whether it inappropriately accelerated bank takeovers.

The change to Section 382 of the tax code -- a provision that limited a kind of tax shelter arising in corporate mergers -- came after a two-decade effort by conservative economists and Republican administration officials to eliminate or overhaul the law, which is so little-known that even influential tax experts sometimes draw a blank at its mention....
The notice was released on a momentous day in the banking industry. It not only came 24 hours after the House of Representatives initially defeated the bailout bill, but also one day after Wachovia agreed to be acquired by Citigroup in a government-brokered deal.
The Treasury notice suddenly made it much more attractive to acquire distressed banks, and Wells Fargo, which had been an earlier suitor for Wachovia, made a new and ultimately successful play to take it over.

To give them their due, I would guess that this was a sincere attempt to help the banking industry rather than a cynical exploitation of "a good day to get out anything we want to bury" in order to push through a profitable but unpopular change. And it's unlikely that the decision will be reversed now - the WP quotes one lawyer comparing being "anti-bailout" now to being "anti-war" on September 12 2001.

The deeper question is: should we really be encouraging bank consolidation? We've already got a fair number of banks that are too big to fail. How much bigger do you want them to get?