quote:

A Question for A.I.G.: Where Did the Cash Go?

Published: October 29, 2008

The American International Group is rapidly running through $123 billion in emergency lending provided by the Federal Reserve, raising questions about how a company claiming to be solvent in September could have developed such a big hole by October. Some analysts say at least part of the shortfall must have been there all along, hidden by irregular accounting.


_{Donn Vickrey, a forensic analyst, is skeptical of A.I.G.’s past reports. “You don’t just suddenly lose $120 billion overnight,” he said.}

Martin Sullivan, left, former head of A.I.G., with Lynn Turner of the S.E.C. at a House hearing.

“You don’t just suddenly lose $120 billion overnight,” said Donn Vickrey of Gradient Analytics, an independent securities research firm in Scottsdale, Ariz.

Mr. Vickrey says he believes A.I.G. must have already accumulated tens of billions of dollars worth of losses by mid-September, when it came close to collapse and received an $85 billion emergency line of credit by the Fed. That loan was later supplemented by a $38 billion lending facility.

But losses on that scale do not show up in the company’s financial filings. Instead, A.I.G. replenished its capital by issuing $20 billion in stock and debt in May and reassured investors that it had an ample cushion. It also said that it was making its accounting more precise.

Mr. Vickrey and other analysts are examining the company’s disclosures for clues that the cushion was threadbare and that company officials knew they had major losses months before the bailout.

Tantalizing support for this argument comes from what appears to have been a behind-the-scenes clash at the company over how to value some of its derivatives contracts. An accountant brought in by the company because of an earlier scandal was pushed to the sidelines on this issue, and the company’s outside auditor,PricewaterhouseCoopers, warned of a material weakness months before the government bailout.

The internal auditor resigned and is now in seclusion, according to a former colleague. His account, from a prepared text, was read by Representative Henry A. Waxman, Democrat of California and chairman of the House Committee on Oversight and Government Reform, in a hearing this month.

These accounting questions are of interest not only because taxpayers are footing the bill at A.I.G. but also because the post-mortems may point to a fundamental flaw in the Fed bailout: the money is buoying an insurer — and its trading partners — whose cash needs could easily exceed the existing government backstop if the housing sector continues to deteriorate.

Edward M. Liddy, the insurance executive brought in by the government to restructure A.I.G., has already said that although he does not want to seek more money from the Fed, he may have to do so.

Continuing Risk

Fear that the losses are bigger and that more surprises are in store is one of the factors beneath the turmoil in the credit markets, market participants say.

“When investors don’t have full and honest information, they tend to sell everything, both the good and bad assets,” said Janet Tavakoli, president of Tavakoli Structured Finance, a consulting firm in Chicago. “It’s really bad for the markets. Things don’t heal until you take care of that.”

A.I.G. has declined to provide a detailed account of how it has used the Fed’s money. The company said it could not provide more information ahead of its quarterly report, expected next week, the first under new management. The Fed releases a weekly figure, most recently showing that $90 billion of the $123 billion available has been drawn down.

A.I.G. has outlined only broad categories: some is being used to shore up its securities-lending program, some to make good on its guaranteed investment contracts, some to pay for day-to-day operations and — of perhaps greatest interest to watchdogs — tens of billions of dollars to post collateral with other financial institutions, as required by A.I.G.’s many derivatives contracts.

No information has been supplied yet about who these counterparties are, how much collateral they have received or what additional tripwires may require even more collateral if the housing market continues to slide.

Ms. Tavakoli said she thought that instead of pouring in more and more money, the Fed should bring A.I.G. together with all its derivatives counterparties and put a moratorium on the collateral calls. “We did that with ACA,” she said, referring to ACA Capital Holdings, a bond insurance company that filed for bankruptcy in 2007.

Of the two big Fed loans, the smaller one, the $38 billion supplementary lending facility, was extended solely to prevent further losses in the securities-lending business. So far, $18 billion has been drawn down for that purpose.

For securities lending, an institution with a long time horizon makes extra money by lending out securities to shorter-term borrowers. The borrowers are often hedge funds setting up short trades, betting a stock’s price will fall. They typically give A.I.G. cash or cashlike instruments in return. Then, while A.I.G. waits for the borrowers to bring back the securities, it invests the money.

In the last few months, borrowers came back for their money, and A.I.G. did not have enough to repay them because of market losses on its investments. Through the secondary lending facility, the insurer is now sending those investments to the Fed, and getting cash in turn to repay customers.

A spokesman for the insurer, Nicholas J. Ashooh, said A.I.G. did not anticipate having to use the entire $38 billion facility. At midyear, A.I.G. had a shortfall of $15.6 billion in that program, which it says has grown to $18 billion. Another spokesman, Joe Norton, said the company was getting out of this business. Of the government’s original $85 billion line of credit, the company has drawn down about $72 billion. It must pay 8.5 percent interest on those funds.

An estimated $13 billion of the money was needed to make good on investment accounts that A.I.G. typically offered to municipalities, called guaranteed investment contracts, or G.I.C.’s.

When a local government issues a construction bond, for example, it places the proceeds in a guaranteed investment contract, from which it can draw the funds to pay contractors.

After the insurer’s credit rating was downgraded in September, its G.I.C. customers had the right to pull out their proceeds immediately. Regulators say that A.I.G. had to come up with $13 billion, more than half of its total G.I.C. business. Rather than liquidate some investments at losses, it used that much of the Fed loan.

For $59 billion of the $72 billion A.I.G. has used, the company has provided no breakdown. A block of it has been used for day-to-day operations, a broad category that raises eyebrows since the company has been tarnished by reports of expensive trips and bonuses for executives.

The biggest portion of the Fed loan is apparently being used as collateral for A.I.G.’s derivatives contracts, including credit-default swaps.

The swap contracts are of great interest because they are at the heart of the insurer’s near collapse and even A.I.G. does not know how much could be needed to support them. They are essentially a type of insurance that protects investors against default of fixed-income securities. A.I.G. wrote this insurance on hundreds of billions of dollars’ worth of debt, much of it linked to mortgages.

Through last year, senior executives said that there was nothing to fear, that its swaps were rock solid. The portfolio “is well structured” and is subjected to “monitoring, modeling and analysis,” Martin J. Sullivan, A.I.G.’s chief executive at the time, told securities analysts in the summer of 2007.

Gathering Storm

By fall, as the mortgage crisis began roiling financial institutions, internal and external auditors were questioning how A.I.G. was measuring its swaps. They suggested the portfolio was incurring losses. It was as if the company had insured beachfront property in a hurricane zone without charging high enough premiums.

But A.I.G. executives, especially those in the swaps business, argued that any decline was theoretical because the hurricane had not hit. The underlying mortgage-related securities were still paying, they said, and there was no reason to think they would stop doing so.

A.I.G. had come under fire for accounting irregularities some years back and had brought in a former accounting expert from the Securities and Exchange Commission. He began to focus on the company’s accounting for its credit-default swaps and collided with Joseph Cassano, the head of the company’s financial products division, according to a letter read by Mr. Waxman at the recent Congressional hearing.

When the expert tried to revise A.I.G.’s method for measuring its swaps, he said that Mr. Cassano told him, “I have deliberately excluded you from the valuation because I was concerned that you would pollute the process.”

Mr. Cassano did not attend the hearing and was unavailable for comment. The company’s independent auditor, PricewaterhouseCoopers, was the next to raise an alarm. It briefed Mr. Sullivan late in November, warning that it had found a “material weakness” because the unit that valued the swaps lacked sufficient oversight.

About a week after the auditor’s briefing, Mr. Sullivan and other executives said nothing about the warning in a presentation to securities analysts, according to a transcript. They said that while disruptions in the markets were making it difficult to value its swaps, the company had made a “best estimate” and concluded that its swaps had lost about $1.6 billion in value by the end of November.

Still, PricewaterhouseCoopers appears to have pressed for more. In February, A.I.G. said in a regulatory filing that it needed to “clarify and expand” its disclosures about its credit-default swaps. They had declined not by $1.6 billion, as previously reported, but by $5.9 billion at the end of November, A.I.G. said. PricewaterhouseCoopers subsequently signed off on the company’s accounting while making reference to the material weakness.

Investors shuddered over the revision, driving A.I.G.’s stock down 12 percent. Mr. Vickrey, whose firm grades companies on the credibility of their reported earnings, gave the company an F. Mr. Sullivan, his credibility waning, was forced out months later.

The Losses Grow

Through spring and summer, the company said it was still gathering information about the swaps and tucked references of widening losses into the footnotes of its financial statements: $11.4 billion at the end of 2007, $20.6 billion at the end of March, $26 billion at the end of June. The company stressed that the losses were theoretical: no cash had actually gone out the door.

“If these aren’t cash losses, why are you having to put up collateral to the counterparties?” Mr. Vickrey asked in a recent interview. The fact that the insurer had to post collateral suggests that the counterparties thought A.I.G.’s swaps losses were greater than disclosed, he said. By midyear, the insurer had been forced to post collateral of $16.5 billion on the swaps.

Though the company has not disclosed how much collateral it has posted since then, its $447 billion portfolio of credit-default swaps could require far more if the economy continues to weaken. More federal assistance would then essentially flow through A.I.G. to counterparties.

“We may be better off in the long run letting the losses be realized and letting the people who took the risk bear the loss,” said Bill Bergman, senior equity analyst at the market research company Morningstar.

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Op vrijdag 31 oktober 2008 07:16 schreef henkway het volgende:
later lesen

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Op vrijdag 31 oktober 2008 01:16 schreef Drugshond het volgende:
Over AIG kun je boeken schrijven.

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Op vrijdag 31 oktober 2008 09:41 schreef SeLang het volgende:

[..]

Ik verheug me al op de boeken die de komende jaren gaan verschijnen over de wantoestanden bij AIG en anderen

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Op vrijdag 31 oktober 2008 09:41 schreef SeLang het volgende:

[..]

Ik verheug me al op de boeken die de komende jaren gaan verschijnen over de wantoestanden bij AIG en anderen

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Op zaterdag 1 november 2008 13:06 schreef TubewayDigital het volgende:
als het slecht met je gaat kan je de schijn ophouden door een voetbalclub te sponseren: aig, fortis

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Op vrijdag 31 oktober 2008 10:28 schreef Drugshond het volgende:

[..]


Die zullen er zeker komen....
Een soort van kortsluitng....
[ afbeelding ]
Maar dan beter...wilder....spannender....absurder.

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Op zaterdag 1 november 2008 13:43 schreef jpjedi het volgende:

[..]

Die crisis is nu te verklaren maar was niet echt te voorspellen.

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Op vrijdag 31 oktober 2008 10:54 schreef HarryP het volgende:

[..]

Citigroup ....

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Op zaterdag 1 november 2008 14:02 schreef SeLang het volgende:

[..]

Nu verbaas je me toch echt, jpjedi.
Kijk alleen al naar de topicreeksen hier op Fok, ver voor de creditcrunch begon.

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Op zaterdag 1 november 2008 16:14 schreef jpjedi het volgende:

[..]

Die sponsor contracten zijn al enkele jaren oud en kunnen dan geen verkapte "het gaat goed" campagne als bedoeling hebben. Dat was meer mijn insteek met die opmerking.

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Judge: AIG fraud worth $500 million
Five former insurance executives convicted of manipulating financial statements could face up to life in prison.

November 3, 2008: 1:14 PM ET

Two years ago it seemed that the election would hinge on Iraq, now it's the economy that's on voter's minds. Here's how that happened.

NEW HAVEN, Conn. (AP) -- A federal judge has ruled that shareholders of American International Group Inc. lost more than $500 million as a result of a scheme to manipulate the financial statements of the world's largest insurance company.

The ruling Friday by judge Christopher Droney means five former insurance executives convicted of the scheme could face up to life in prison under advisory sentencing guidelines.

Four former executives of General Re Corp. and a former executive of AIG (AIG, Fortune 500) were convicted in February of conspiracy, securities fraud, mail fraud and making false statements to the Securities and Exchange Commission.

Prosecutors filed court papers citing a study by its expert that concluded the fraud-related losses to AIG shareholders totaled $1.2 billion to $1.4 billion.

They cited another methodology by the expert that put the losses at $544 million to $597 million, but said either method is reasonable.

Droney rejected the higher estimate but said the lower range was reasonable. That finding and a determination that the fraud affected more than 250 victims will increase the advisory guideline sentence range.

The guideline range and a sentencing date have not been set yet.

The defendants challenged the estimate, saying there was no loss to investors. The defendants are Christopher Garand, Ronald Ferguson, Elizabeth Monrad, Robert Graham and Christian Milton.

Ferguson has said in court papers that he anticipated the government will advocate a loss amount that leads to a recommendation for life in prison. But prosecutors made no such recommendation, simply concluding that the defendants should receive a "substantial" prison sentence.

A report by the probation department recommended sentences of 14 years to more than 17 years for each defendant.

Prosecutors said the defendants participated in a scheme in which AIG paid Gen Re as part of a secret side agreement to take out reinsurance policies with AIG in 2000 and 2001, propping up its stock price and inflating reserves by $500 million.

Reinsurance policies are backups purchased by insurance companies to completely or partly insure the risk they have assumed for their customers.

General Re is part of Berkshire Hathaway Inc., (BRK.A) which is led by billionaire investor Warren Buffett of Omaha, Neb. To top of page

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The Black Hole Gets Bigger: AIG Back for Yet Another Bailout

The Financial Times reports that AIG is up to its old tricks, back again to the trough for more money. Christmas The Iceland credit default swaps settlement is coming soon, you know.

The worst is that AIG is pretending to act as if this is a negotiation as opposed to extortion. Get a load of this crap:

AIG’s executives were on Friday night locked in negotiations with the authorities over a plan that could involve a debt-for-equity swap and the government’s purchase of troubled mortgage-backed securities from the insurer.


Ahem, are they trying to help the government by coming up with a fig leaf? Are they assuming that everyone forgot the terms of the original loan? From the Fed's press release:

The interests of taxpayers are protected by key terms of the loan. The loan is collateralized by all the assets of AIG, and of its primary non-regulated subsidiaries. These assets include the stock of substantially all of the regulated subsidiaries. The loan is expected to be repaid from the proceeds of the sale of the firm’s assets. The U.S. government will receive a 79.9 percent equity interest in AIG and has the right to veto the payment of dividends to common and preferred shareholders.


The "interests of taxpayers are protected bit" now looks like a complete joke. The original loan was ALREADY secured by ALL of AIG's assets. Everything that could be hocked WAS ALREADY hocked. And the government has a 79.9% equity interest. So what is this talk of a debt for equity swap? The government doesn't want to go over 79.9%, then it has to consolidate the operations on its balance sheet. And it has the right of first refusal on everything else (the fact that it has all the assets as security means they cannot be sold unless the proceeds are remitted to the Fed. The mechanics ought to be that AIG gets some sort of waiver in order to complete a sale, but I am certain somewhere the lawyers have a procedure in mind, since it was understood from the get-go that AIG would repay the loan via asset sales).

The idea of selling dodgy MBS to the Fed is also ludicrous, but that does not mean the Fed will not go ahead with it. Again, the Fed now has ALL of AIG's assets as security. So it is going to increase what it lends to AIG, since AIG really has the upper hand, and AIG is offering the ruse of pledging the MBS because other banks have used MBS as collateral for loans, and version 1.0 of the TARP was to have banks sell crappy MBS to Treasury. So AIG presumably hopes that the Fed will gamble that the generally inattentive public at large will think this latest move resembles other bank rescue activities and therefore will not make angry calls to Congressmen. But this is all a ruse.

This is the essence of AIG's latest proposal:
Man walks into pawn broker. He says to the person behind the counter, "You know that watch I brought in two weeks ago? I know you lent me $85, but now I need another $50. And I will tell you why you will give it to me. I have a gun with me. I will blow my brains out here, right now. With your nice carpet, I guarantee it will cost you more than $50 to clean up your store. And that's before we get into the cost of keeping your store closed while you clean my grey matter off your walls and what my suicide might do to your store's reputation."


Oh, and we forgot to mention that the man in the story above pulled the same trick last week and it worked like a charm.

The other bit that is offensive is (separately) that AIG is unhappy that it is paying more its bailout than banks did for theirs. The arrogance is breathtaking. Banks and securities firms are regulated by Federal agencies. The fact that they came close to going under says the oversight was defective, and one can argue that the government was required to prevent a disaster that happened on its watch.

The federal government has NO oversight over AIG. Its mess was SOLELY AIG's own doing, and they should consider themselves incredibly lucky that they were so big that the Fed felt it has to intercede.

Now they think they are entitled to demand an improvement of terms? They should be told to take a long walk off a short pier (the management, that is). If we are merely going to salvage random about-to-fail-that-might-hurt-the-financial-markets players, I'd much rather rescue GM. They at least have a better attitude (and Obama made noises that he would demand better fuel efficiency as a quid pro quo). And I have far more sympathy for blue collar workers than AIG executives.

And if the interest really is too much for AIG on a current basis, no reduction in rate or debt-for-equity optics. Just lower the proportion that has to be paid in cash, and add the deferred interest to the principal. No free lunches here.

But then again, the Fed does not want brains and skull fragments all over its board room....

From the Financial Times:

AIG is asking the US government for a new bail-out less than two months after the Federal Reserve came to the rescue of the stricken insurer with an $85bn loan...

People close to the talks said the discussions were on-going and might still collapse, but added that AIG was pressing for a decision before it reports third-quarter results on Monday...

The moves come amid growing fears AIG might soon use up the $85bn cash infusion it received from the Fed in September, as well as an additional $37.5bn loan aimed at stemming a cash drain from the insurer’s securities lending unit.

AIG has drawn down more than $81bn of the combined $122.5bn facility. The company’s efforts to begin repaying it before the 2010 deadline have been hampered by its difficulties in selling assets amid the global financial turmoil.

AIG executives have complained to government officials that the interest rate on the initial loan – 8.5 per cent over the London Interbank Borrowing Rate – is crippling the company.

They compared the loan’s terms with the 5 per cent interest rate paid by the banks that recently sold preferred shares to the government.

One of AIG’s proposals to the Fed is to swap the loan, which gave the authorities an 80 per cent stake in the company, for preferred shares or a mixture of debt and equity.

Such a structure would reduce the interest rate to be paid by AIG and possibly the overall amount it has to repay. An extension in the term of the loan from the current two years to five years is also possible, according to people close to the situation.

The renegotiation of the loan could be accompanied by the government’s purchase of billions of dollars in mortgage-backed securities whose steep fall in value has been draining AIG cash reserves.

AIG is also proposing the government buy the bonds underlying its troubled portfolio of credit default swaps in exchange for the roughly $30bn in collateral the company holds against the assets.

quote:

AIG reportedly in talks over new bailout
By MarketWatch

SAN FRANCISCO (MarketWatch) -- American International Group Inc. reportedly is seeking a new bailout from the U.S. government less than two months after the Federal Reserve came to the insurance giant's rescue with an $85 billion loan, according to a published report.
The Financial Times reported on its Web site late Friday, citing people close to the situation, that AIG
executives were in negotiations Friday night with authorities over a plan that could involve a debt-for-equity swap and the government's purchase of mortgage-backed securities from AIG.
The FT said talks might still collapse, but noted that the insurer was pressing for a decision before it posts third-quarter results on Monday.
American International Group Inc. is expected to report third-quarter loss of 90 cents a share, according to analysts surveyed by Thomson Reuters.
Leading industry analysts have said that turmoil in equity and credit markets has been hampering AIG's efforts to sell some of its businesses, a crucial part of the insurer's plan to repay billions of dollars in expensive government loans.
Rival insurers that may be considering bidding for AIG businesses are now facing their own problems as slumping stock prices and wider credit spreads cut into capital, Andrew Kligerman of UBS wrote to investors about a week ago.
That's slowing what investors hoped would be fast asset sales by AIG, possibly preventing the insurer from quickly repaying the Federal Reserve's loan, the analyst wrote.
Wider credit spreads may be triggering more demands for AIG to post collateral to support the credit default swaps it wrote. That likely increases the amount of money the insurer has to borrow from the Fed, which, in turn, means even more asset sales, the analyst explained.
Kligerman said he expected that AIG would take about $25 billion in write-downs on its credit default swap exposures when the insurer reports third-quarter results.

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Op zondag 9 november 2008 15:34 schreef Drugshond het volgende:

[..]

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AIG's Plan D
Maurna Desmond, 11.09.08, 12:00 PM ET

After nearly eight weeks of questions, the world is likely to get some answers Monday about exactly what's going on with American International Group, the official insurance company of the United States.

The bedragged stock of American International Group (nyse: AIG - news - people ) surged 12.3% Friday after reports emerged that the government and the insurer are in talks to renegotiate the draconian terms of the $85.0 billion bridge loan that kept the company afloat in September and to discuss another massive taxpayer investment in the form of preferred shares, according to TradeTheNews.com.

Nick Ashooh, a spokesman for AIG, did not deny the reports and told Forbes.com, "We continue to evaluate other potential options for addressing our financial issues" specifically in regard to the onerous 14.0% interest rate on AIG's bridge loan.

It's clear that government intends to soften its grip on AIG to try to enable the insurer -- in which the Federal Reserve has a 79.9% stake as a result of its extraordinary action to rescue the company -- to return to health. Reports that it is trying to act before Monday's third-quarter earnings announcement is an ominous sign that the pending news is not good and that resulting downgrades by credit ratings agencies, are likely. If AIG or its subsidiaries get dinged, they may have to post additional collateral for various deals and may have troubled writing new business.

Drastic on-the-fly measures have become business as usual for American International Group. Since the September bailout, the government has tossed AIG two additional tax-payer funded credit lines. Some of this money is being used to replace borrowings under the original $85.0 billion bridge loan, but it is hard to see when the cash spigot will be turned off. This is because the plan for AIG to pare down its businesses and use the proceeds of asset sales to pay back its borrowings appears increasingly unlikely, leaving taxpayers on the hook for the long haul.

Chief Executive Edward Liddy said divestitures would be an "open and transparent process" and that deals might be announced as soon as September. As of Friday, no disposals have been reported. The garage sale hasn't been much of a success so far, in part because AIG isn't under immediate pressure to sell now that it has the Fed's cash. But the longer it remains on life support, the more the risk that the value of the company's businesses will deteriorate, given the global financial crisis.

"We recognize that the environment has gotten more difficult, but we have additional flexibility with two credit facilities and the quality of our businesses," said Ashooh. "There's a lot of activity but this process will play out over months."

The insurer's determination to avoid fire sales may be futile. For one thing, the likely buyers are competing companies -- who might benefit more from letting the situation drag on and attempting to grab clients and employees who desert AIG. Potential acquirers with a less Machiavellian bent can still be conservative about when and how much they bid, knowing the the firm has to sell some of its assets at some point.

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AIG May Get Expanded Government Funds of $150 Billion (Update1)

Nov. 10 (Bloomberg) – American International Group Inc., the insurer bailed out by the U.S., may get an expanded government rescue package valued at more than $150 billion that includes lower interest rates and more time to repay the debt.

The U.S. will reduce the original $85 billion loan that saved New York-based AIG in September to $60 billion, buy $40 billion of preferred shares, and purchase $52.5 billion of mortgage securities owned or backed by the company, according to a person familiar with the matter. The funds will help AIG retire part of its credit-default swap holdings and bolster its securities lending operations, said the person, who declined to be identified because the plan hasn't been officially announced.

The changes may give Chief Executive Officer Edward Liddy more time to salvage AIG, which needed U.S. help to escape bankruptcy after three quarterly losses exceeding $18 billion. Liddy's plan to repay the original loan by selling units stalled as plunging financial markets cut into their value and forced potential buyers to shore up their own balance sheets.

``It makes a lot of sense to renegotiate the terms,'' said Andrew Kligerman, a New York-based analyst at UBS AG, in an interview before the disclosure. By giving AIG more time to sell units, the government ``has a better opportunity to recover its capital,'' he said.

Michelle Smith, a spokeswoman for the Federal Reserve in Washington, and AIG's Nicholas Ashooh declined to comment. AIG is scheduled to disclose third-quarter results later today. Terms of the expanded package were reported earlier by the Wall Street Journal. AIG rose 19 cents today to $2.30 in German trading.

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AIG: And Did We Mention $10 Billion in Casino Fun?

The federal government has been generous to AIG. The train wreck of an insurance company has pocketed more than $150 billion in bailout funds: When a first loan of $85 billion and a second one of $38 billion just weren’t enough, the Federal Reserve and the Treasury delivered an apparently foolproof plan of buying back the sinking securities that AIG had insured through credit-default swaps.

But the Wall Street Journal reports today that AIG may still be hungry. It turns out that while run-of-the-mill credit-default swaps were its biggest loser, AIG also managed to lose another $10 billion in bets tied loosely to mortgages and corporate debt.

Says the Journal:

The details of the trades go beyond what AIG has explained to investors about the nature of its risk-taking operations, which led to the firm’s near-collapse in September. In the past, AIG has said that its trades involved helping financial institutions and counterparties insure their securities holdings. The speculative trades, engineered by the insurer’s financial-products unit, represent the first sign that AIG may have been gambling with its own capital.

Too bad AIG didn’t mention this earlier. As the Journal notes, “the terms of the current $150 billion rescue package for AIG don’t cover” the newly disclosed debts:

The structure of the soured deals raises questions about how the insurer will raise the funds to pay the debts. The Federal Reserve, which lent AIG billions of dollars to stay afloat, has no immediate plans to help AIG pay off the speculative trades.

The Journal reports that AIG is now in the position of “having to raise funds to pay off its partners” to cover its casino debts.

AIG’s execs might want to visit Gamblers Anonymous, which offers the following questions for those who feel they may have a problem:

* Did gambling affect your reputation?
* Have you ever felt remorse after gambling?
* Did you ever gamble until your last dollar was gone?
* Did you ever borrow to finance your gambling?

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AIG BAILS ON LOANS FROM FEDS

Uncle Sam may not get paid back as promised in its $150 billion bailout of American International Group, the giant insurer conceded.

AIG had agreed as a condition of its recent government lifeline to escape bankruptcy that it would repay at least $60 billion by selling valuable assets.

However, CEO Ed Liddy admitted yesterday that it may not be that easy to raise the cash.

"These are challenging times to undertake divestiture," Liddy acknowledged at a Hong Kong luncheon speech, far from the ears of Washington, DC, lawmakers. "It's quite possible that the pace and order of our divestitures will change."

AIG promised to sell life insurance, retirement services and an airplane-leasing unit to repay a $60 billion government loan in its overall $150 billion - and counting - rescue package, in exchange for Uncle Sam taking a 79.9 percent stake in AIG.

Among units being shopped are American Life Insurance Co.'s Japanese unit, AIG Star Life Insurance Co. and AIG Edison Life Insurance Co.

Meanwhile, AIG is slashing prices to win new insurance business and gain quick cash, stoking industry fears that it's taking on too much new exposure but charging too little in premiums to ever pay future claims.

Such practices nearly sank the industry in the 1980s, and this time could leave taxpayers holding the bag for huge claims.

"I think it's fair to say they're doing some very stupid things in the market," said Edmund Kelly, CEO of rival Liberty Mutual.

quote:

AIG Seeks to Ease Its Bailout Terms



American International Group Inc. is seeking an overhaul of its $150 billion government bailout package that would substantially reduce the insurer's financial burden, while further exposing U.S. taxpayers to its fortunes, people familiar with the matter say.

Under the plan, the government loan of up to $60 billion at the heart of the bailout would be repaid with a combination of debt, equity, cash and operating businesses, such as stakes in AIG's lucrative Asian life-insurance arms. AIG and the government have been discussing the changes since December and plan to announce them by Monday when the insurer is expected to report fourth-quarter results, the people said.

The earnings report is expected to underscore AIG's worsening condition with its total loss for the quarter likely to top $60 billion, these people said.


One of the restructuring plan's central goals is to safeguard AIG's credit ratings, which, if cut, would force it to make billions of dollars in payments to its trading partners, further weakening its already precarious financial position. The new plan is being structured in close consultation with major credit-rating agencies.

AIG's talks with the government are ongoing and while they are at an advanced stage the deal may still fall apart or change significantly.

Government approval would signal a complete turnabout in its approach to the insurer since it first intervened to rescue it: from that of a creditor to one of a potential owner.

At the time of the original bailout in September, the government imposed what many considered onerous interest rates and deadlines for AIG to repay its loans by selling off assets. It quickly became clear, however, that the erosion of the value of AIG's assets and worsening financial crisis would make it difficult to meet the goals without jettisoning assets at fire-sale prices.

"The markets aren't open for asset sales," said one person close to AIG. "There is a trade-off between protecting the value of the assets for the government and just selling them in the short term."

Under the new structure, AIG's interest burden on the government money would be reduced. It currently pays 3% plus the London interbank offered rate, or Libor, a common benchmark interest rate, on a loan of up to $60 billion that it gets from the government, and also pays a 10% annual dividend on a separate $40 billion investment by the government in the company.

The plan would entail a wholesale restructuring of the company. AIG would continue to try to sell some assets to repay its obligations but other assets would be transferred to the government in lieu of cash repayment.

The assets, expected to include some of AIG's Asian holdings, would likely be spun off and may be taken public with the government owning a major stake, according to people familiar with the discussions. AIG's debt to the government would be reduced by an equal amount.

One major sticking point is how to value the assets, especially because prices are in rapid decline. Similarly, the government could end up the outright owner of certain businesses, which presents myriad issues, both operational and regulatory.

Inside the Fed, officials have been worried about AIG's fourth-quarter loss and about the risk that the insurance giant will have its credit rating downgraded. AIG's share price has fallen nearly 59% since the end of January and ended trading Monday at just 53 cents a share.

That AIG would be reporting large investment losses in the fourth quarter is not, in and of itself, a huge surprise given the turmoil in the financial markets late last year and the breadth of the company's portfolio.

In a statement Monday, the company said it is continuing to work with the government "to evaluate potential new alternatives for addressing AIG's financial challenges." The company has a week to report fourth-quarter and full 2008 earnings.

"We will provide a complete update when we report financial results in the near future," AIG said. News of AIG's expected loss was first reported by CNBC.

The government's stake in the parent company already stands at nearly 80% and is unlikely to be substantially changed in the near term, according to a person close to AIG.

The new rescue moves are being weighed in part because a new credit-rating downgrade would force AIG to come up with billions of dollars to pay counterparties. It was just such a downgrade in September that nearly pushed AIG into bankruptcy and triggered the initial rescue.


"If there were a downgrade, it would be difficult," says a person familiar with the matter. "Nothing's locked down. Everything is under discussion."

AIG's results are expected to include large write-downs of its exposures to commercial mortgage debt, which suffered record price declines during the fourth quarter of last year. Delinquencies among real-estate loans, which help finance office buildings, shopping centers and other properties, are also on the rise, a factor that is weighing on their values.

A Merrill Lynch index of triple-A commercial real-estate securities indicates prices declined around 13% in the fourth quarter and currently trade at around 75% of their original values. Similar securities with lower ratings fared much worse -- some declining 50% or more during the quarter.

Even though the Federal Reserve helped protect AIG from further write-downs on certain swap positions late last year by financing the purchase of troubled securities AIG had insured against losses, the company continued to incur collateral calls and further write-downs on other swap trades that couldn't be unwound easily. Most of the troubled collateralized debt obligations were backed mainly by subprime-mortgage collateral. Prices of those mortgage assets also slumped further during the fourth quarter.

The threat of further collateral calls is one major reason why a downgrade in AIG's credit ratings could pose an immediate threat to its liquidity.

Standard & Poor's has an A-minus long-term rating on AIG, and Moody's Investors Service has an equivalent rating of A3. Both credit-rating firms said Oct. 3 they were reviewing the ratings for downgrades. Such reviews typically take around 90 days, but have been known to go longer.

Rating downgrades from current levels could be devastating to AIG's finances and would trigger billions of dollars more in payments to its policyholders, trading partners and customers.

A one-notch rating cut would push AIG's long-term ratings down to BBB-plus at S&P and Baa1 at Moody's. Downgrades may also cause AIG's short-term debt ratings to fall below A-1, which is the minimum rating threshold for borrowings under the Federal Reserve's Commercial Paper Funding Facility.

Since that facility went live in late October, some AIG units have been tapping it to the tune of around $15 billion. Any loss of access to these rolling three-month loans -- which have very low interest rates -- may force AIG to draw down more of its credit line from the Fed and incur significantly more in interest costs.

In a November filing with the Securities and Exchange Commission, AIG warned that a one-notch downgrade of its long-term rating could cause it to have to pay out around $8 billion to its counterparties, including collateral and "termination payments" on contracts it has written.

The filing said the impact of a two-notch downgrade from current levels could be much bigger, giving counterparties the right to terminate transactions that cover nearly $48 billion in debt. AIG has since exited or posted collateral against some of those positions, so its actual cash outflow in such a situation would likely be less than that amount.

AIG's rescue package has already been increased twice since September, from $85 billion to nearly $123 billion in October and then to $150 billion in November.

The expanded rescue reflects, in part, the pressure on AIG from the same market turmoil that's tripping up many other financial institutions that made soured bets on the housing market. AIG's losses for the first three quarters of 2008 were due largely to write-downs in the value of credit protection it had sold on securities backed in part by subprime mortgages.

The latest changes under consideration could require the government to increase its exposure to potential losses, if they lead to the government essentially insulating AIG from some losses on risky assets still in its portfolio, even if it doesn't actually put up any more dollars right away. With Citigroup Inc., for instance, the government has agreed to shoulder most losses on $301 billion of assets.

As of Sept. 30, AIG was exposed to commercial mortgage-backed securities originally valued at at least $20 billion, but that sector has been hit hard during the downturn.

Yet insuring against losses on troubled assets might be another imperfect solution. Such protection has been used in other cases -- Citigroup and Bank of America Corp. -- and the share prices of both companies have kept falling.

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Insurance giant AIG has reported a loss of $61.7bn (£43bn) in the final three months of 2008 - the largest quarterly loss in US corporate history. And the firm will receive an extra $30bn from the US government as part of a revamped rescue package.

AIG has already received $150bn in financial support - the biggest bail-out by far of any US company.
Stock markets slid sharply as AIG's plight underscored fears about the health of the global financial system.
In a joint statement, the Federal Reserve and the Treasury said that AIG continues to face significant challenges. "The additional resources will help stabilise the company, and in doing so help to stabilise the financial system," it said.

The news of AIG's historic loss comes as HSBC, Europe's biggest bank, seeks to raise £12.5bn ($17.7bn) to strengthen its finances following a 62% fall in annual profit.

Revamp
The revamped rescue package also involves a restructuring of AIG's operations.
It calls for the Federal Reserve to take stakes in two of AIG's international units in exchange for reducing AIG's debt. The new measures will also effectively cut the interest payments the insurer must pay to the Federal Reserve.

The AIG financial support is about three times greater than that given to Citigroup, which has received $50bn, and Bank of America, which has received $45bn. US officials fear that a failure of AIG would be disastrous for both the US and the global economy.

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een record in de geschiedenis van het Amerikaanse zakenleven

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And the firm will receive an extra $30bn from the US government as part of a revamped rescue package.

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Op maandag 2 maart 2009 15:10 schreef Basp1 het volgende:

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Hoeveel geld is al in dat bedrijf gestoken?

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Op maandag 2 maart 2009 15:20 schreef Roel_Jewel het volgende:

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150.000.000.000 dollar.

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Op maandag 2 maart 2009 15:31 schreef Basp1 het volgende:

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Zit daar die 30 miljard van het bericht van vanochtend ook bij?

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Op maandag 2 maart 2009 17:01 schreef wolfrolf het volgende:
Waarom zou het nu eigenlijk zo enorm desastreus zijn als AIG omvalt? Het is een verzekerings maatschappij. So what?

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Op maandag 2 maart 2009 17:34 schreef wolfrolf het volgende:
Logische verklaring, thanks R_J En dat ze 116.000 werknemers hebben wist ik niet

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Op maandag 2 maart 2009 17:01 schreef wolfrolf het volgende:
Waarom zou het nu eigenlijk zo enorm desastreus zijn als AIG omvalt? Het is een verzekerings maatschappij. So what?

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Op maandag 2 maart 2009 17:01 schreef wolfrolf het volgende:
Waarom zou het nu eigenlijk zo enorm desastreus zijn als AIG omvalt? Het is een verzekerings maatschappij. So what?

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Volgens andere sites (nakedcapitalism o.a.) is de tegenpartij van AIG in bepaalde contracten een bank die het niet zo fijn zou vinden als ze geen geld meer krijgen. Onder andere Goldman Sachs wordt op deze manier via een omweg van geld voorzien door de Amerikaanse belastingbetaler. Mijns inziens reden temeer om het hele CDS casino te bevriezen en te liquideren.

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The big insurer's former chief files fraud lawsuit after losing a bundle on company stock.

Just a little over a year ago Maurice "Hank" Greenberg, the man who built American International Group into the world’s biggest insurer, pondered starting a war to take back control of the company that fired him. Now he says AIG executives fooled him into purchasing shares months before they revealed the insurer was essentially bankrupt.

Greenberg sued American International Group (nyse: AIG - news - people ) in federal court on Monday, claiming he purchased shares early last year, part of his deferred compensation plan, based on a healthy financial picture provided by his successor, Martin Sullivan. At the time the stock traded for around $54. Today those shares, and much of Greenberg’s fortune, are almost worthless. AIG stock closed Monday at 42 cents after the U.S government said it would inject yet another $30 billion into the troubled firm. AIG lost a staggering $99.3 billion in 2008 and its fourth-quarter loss was the largest of any American company in history.

"Despite repeated assurances from management and the company that everything was under control, it is now clear that nothing was under control," he told Forbes in September, after the insurer’s takeover by the government knocked him off the list of the 400 richest Americans. In 2007 Greenberg ranked as the 135th wealthiest person in the nation.

Greenberg spent 37 years at the top of AIG, building it into a global behemoth. When he took over in 1968 it was a privately held, midsize company. He made dozens of acquisitions capped by his buying SunAmerica for $18 billion and American General for $23 billion. As a manager he insisted on healthy food in the cafeteria--including his favorite, baked scrod--and badgered Wall Street traders about AIG’s share price. The company’s market value, just $300 million when he took over, rose to $230 billion in 2000.

Then New York Attorney General Eliot Spitzer, fresh from his $1.5 billion victory over Wall Street’s brokerage houses, went after Greenberg with a vengeance. Spitzer’s office focused on deals between AIG with Berkshire Hathaway's General Re that allowed the latter to book higher reserves without lowering earnings. State investigators deposed dozens of AIG executives--Greenberg took the fifth--and the company’s auditors refused to certify its results. In March 2005 the board, advised by attorney Richard Beattie and facing the possibility of criminal charges that could wreck AIG, fired Greenberg and settled with Spitzer.

Greenberg contemplated a proxy fight to win back control. Despite his unceremonial departure he remained the company’s biggest individual shareholder. The lust for revenge may have been his financial undoing. In late 2007 his Bermuda-based insurance company C.V. Starr controlled 10% of AIG stock worth $15.4 billion. By April of 2008 the firm controlled nearly 100 million more shares and 13.6% of AIG.

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March 9 (Bloomberg) -- American International Group Inc. appealed for its fourth U.S. rescue by telling regulators the company’s collapse could cripple money-market funds, force European banks to raise capital, cause competing life insurers to fail and wipe out the taxpayers’ stake in the firm.

AIG needed immediate help from the Federal Reserve and Treasury to prevent a “catastrophic” collapse that would be worse for markets than the demise last year of Lehman Brothers Holdings Inc., according to a 21-page draft AIG presentation dated Feb. 26, labeled as “strictly confidential” and circulated among federal and state regulators.

“What happens to AIG has the potential to trigger a cascading set of further failures which cannot be stopped except by extraordinary means,’’ said the presentation by New York- based AIG. “Insurance is the oxygen of the free enterprise system. Without the promise of protection against life’s adversities, the fundamentals of capitalism are undermined.’’

Regulators revised AIG’s bailout last week to ease loan terms and extend $30 billion in fresh capital after the firm posted a $61.7 billion fourth-quarter loss, the worst in U.S. corporate history. Lawmakers are reluctant to give more support beyond the package already in place, worth about $160 billion, because they say regulators haven’t given enough detail about how the funds are being used or when the bailouts will end.

The Fed is “asking for an open-ended check’’ and is “not going to get” it, Senator Robert Menendez, a New Jersey Democrat, said last week in Congressional hearings.

Global Impact

AIG warned of turmoil around the globe if the government allowed the insurer to fail, adding “it is questionable whether the economy could tolerate another shock to the system that a failure of AIG would produce.” The value of the U.S. dollar might fall, Treasury borrowing costs could rise and the agency would face “doubts about the ability of the U.S. to support its banking system,” according to the presentation, parts of which were reported earlier by the New York Times.

Under the scenarios sketched by AIG, European banks that bought credit-default swaps might need to raise $10 billion in capital and could face rating downgrades. Life insurance customers, their faith shaken in the industry, would redeem some of their $19 trillion in U.S. policies, overwhelming firms already weakened by the credit crisis, AIG said.

The $38 billion in support provided by the firm to money- market funds would be in jeopardy, AIG said, possibly forcing some to “break the buck.’’ The term refers to a money fund that suffers losses so large that it must pay investors less than the traditional $1-a-share value that gives the short-term funds their reputation for safety.

Overseas Seizures

Outside the U.S., where AIG operates in more than 140 countries, a collapse could lead to the “immediate seizure’’ of its businesses by regulators and could impair “the entire insurance industry within certain regions,’’ the presentation said, which added that its conclusions were “speculative’’ and a matter of judgment.

“Who knows if what they’re saying is true?’’ said Phillip Phan, professor of management at the Johns Hopkins Carey Business School in Baltimore. “A lot of it sounds like conjecture, that if AIG collapses the rest of the industry will, too. It’s a way of creating a crisis atmosphere and the sense you have to respond quickly.’’

AIG’s latest rescue package includes equity, new credit and lower interest rates on existing loans designed to keep it in business. Federal Reserve Chairman Ben S. Bernanke and Treasury Secretary Timothy Geithner have said the government must prop up AIG to avoid damaging the financial system.

Fed spokeswoman Michelle Smith said the central bank “came to its conclusions based on our own analysis.” Christina Pretto, an AIG spokeswoman and Isaac Baker of the Treasury didn’t immediately have a comment.

Bailout Beneficiaries

New York Insurance Superintendent Eric Dinallo said at a March 5 hearing he’d received the presentation.

The document doesn’t say which other companies have benefited from AIG’s repeated rescues. Goldman Sachs Group Inc. and Deutsche Bank AG were among at least two dozen financial institutions that were paid $50 billion from the bailout funds received by AIG, the Wall Street Journal reported, citing a confidential document and people familiar with the matter whom it didn’t identify.

Goldman and Deutsche got about $6 billion each between September and December, the Journal said. Merrill Lynch & Co., Societe Generale SA, Morgan Stanley, Royal Bank of Scotland Group Plc and HSBC Holdings Plc were other counterparties that also received payments, the newspaper said, citing the document.

Taxpayer Wipeout

AIG’s presentation said that without more U.S. help, investment losses would mean “AIG will not be able to repay its obligations” and that cash previously provided by the U.S., which controls a 79.9 percent stake in the insurer, could be lost. Chief Executive Officer Edward Liddy, who took over the top job in September, has vowed that AIG will repay all of its debts to taxpayers.

At AIG itself, failure could have led to dismissals from its workforce of 116,000, the document said. At that level, the staff is unchanged from the end of 2007 before AIG’s bailout. The global credit crunch has led to at least 284,000 job cuts at the rest of the world’s financial companies, according to Bloomberg data.

The insurer’s first bailout package, crafted last September, later grew to $150 billion. After failing to sell enough subsidiaries to repay the government, AIG had to turn to U.S. taxpayers again. The company may need more support if financial markets don’t improve, the Treasury and Federal Reserve said last week in a joint statement.

quote:

The insurer’s first bailout package, crafted last September, later grew to $150 billion. After failing to sell enough subsidiaries to repay the government, AIG had to turn to U.S. taxpayers again. The company may need more support if financial markets don’t improve, the Treasury and Federal Reserve said last week in a joint statement.

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Op maandag 9 maart 2009 11:57 schreef Maanvis het volgende:
Kan een land eigenlijk oneindig lang doorgaan met het verstrekken van bailouts? Voor zover ik heb begrepen gebeurt dat met geleend geld dat wordt 'geproduceerd' door de centrale bank en is daar geen limiet op, behalve dan hoeveel staatsschuld een land wil oplopen.

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Op maandag 9 maart 2009 12:34 schreef Maanvis het volgende:
Nog 1 vraagje dan:
: Fie staatsschuld die scheld en we maar ff kwijt?

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Op maandag 9 maart 2009 12:38 schreef digitaLL het volgende:

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Dat betekent dat een land default op het aftbetalen van schulden zoals obligaties.

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Op maandag 9 maart 2009 14:47 schreef Maanvis het volgende:

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Defaulten is toch gewoon niet betalen?

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Mijn vraag was eerder: Wat gaat de centrale bank dan doen als we die schulden gewoon ff niet terugbetalen? (bijv. om de burger bezuinigingen/belastingverhoging te besparen)

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Op maandag 9 maart 2009 15:13 schreef digitaLL het volgende:

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Yep
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Ik denk niets tenzij men voor monetization gaat en de obligaties dus met vers gedrukt geld uitbetaalt.
Zimbabwe style zeg maar.
Een default is trouwens ernstig omdat het investeringsklimaat ernstig geschaad wordt.
Rusland heeft in de jaren 90 gedefault en het heeft lang geduurd eer er weer wat geinvesteerd werd. Bovendien was de kapitaalvlucht enorm toen de kredietcrisis uitbrak omdat men Rusland opeens weer bovenaan de ladder van onbetrouwbaarheid zag staan.

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Op maandag 9 maart 2009 15:58 schreef Maanvis het volgende:

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En wat zal het resultaat zijn als elk westers land bewust default om z'n burgers de gevolgen van de crisis te besparen?

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Op maandag 16 maart 2009 11:46 schreef SeLang het volgende:
Als ik het goed lees dan is de meerderlheid van het Amerikaanse bailout geld naar Europese banken gegaan (incl ING en Rabo )!

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AIG publishes counterparty list
By Julie MacIntosh in New York and Alan Beattie in Washington

Published: March 15 2009 23:25 | Last updated: March 15 2009 23:25

AIG caved in to political pressure Sunday and released a list of some of the financial counterparties that benefited from its $160bn US government rescue, including some of Europe’s largest banks.

The list’s publication came after weeks of mounting anger on Capitol Hill that lifelines of public money had been extended to AIG without a clear indication of where the money had gone.

Lawmakers have said that without full disclosure of AIG’s counterparties, Congress would not vote for more money for stabilising the financial system.

AIG has sold hundreds of billions of dollars of credit insurance through AIG Financial Products – the unit that contributed most heavily to the company’s near-collapse in September.

The insurer, which is now attempting to unwind that financial exposure, issued details Sunday on some of the payments it had made to counterparties using emergency government loans.

AIG paid out $22.4bn of collateral related to credit default swaps, $27.1bn to help cancel swaps and another $43.7bn to satisfy the obligations of its securities lending operation. The payments were made between September 16 and the end of last year.

Goldman Sachs, which has also accepted US government support, received payments worth $12.9bn. Three European banks – France’s Société Générale, Germany’s Deutsche Bank and the UK’s Barclays – were paid the next-largest amounts. SocGen received $11.9bn; Deutsche $11.8bn; and Barclays $7.9bn.

Many European banks used AIG’s credit insurance to keep from having to hold capital against their long-term securities holdings. Wall Street banks also used swaps to hedge their subprime mortgage-backed securities portfolios.

A spokeswoman for the US Federal Reserve said Sunday that AIG’s collateral payments were based on “contracts that don’t differentiate domestic versus international companies”. She said the Fed’s aid to AIG helped all of its counterparties, which range from global banks to individual insurance policyholders.

In a fractious hearing on March 5, senators criticised Don Kohn, Fed vice-chairman, for failing to push for publication of the list.

At the time, Mr Kohn said: “I would be very concerned if we started revealing lists of names of companies that did transactions” with AIG. Such publication could rebound not just on the counterparties but on other US financial institutions operating in the same markets, he said.

Under pressure from lawmakers, the Fed went back to AIG and worked out a compromise schedule of publication.

Now that the list is public, the large number of foreign banks that have received money as a byproduct of AIG’s rescue has the potential to cause fresh anger on Capitol Hill. Congress has expressed concern at allowing taxpayer money to leak abroad or to foreign workers.

Nick Ashooh, AIG spokesman, said the group has made headway in its attempts to reduce its exposure to credit default swaps and other derivatives. The notional value of its derivatives exposure has dropped to about $1,600bn from about $2,700bn a year ago, and its CDS exposure has been cut from $433bn to $302bn.

AIG stoked more ire in Washington over the weekend when it became apparent the company would pay $165m in retention bonuses Sunday to employees of AIG Financial Products.

AIG chief Edward Liddy said the bonuses represented “legal, binding obligations”, but said AIG would make a range of compensation cuts in the unit this year.

Mr Liddy also expressed concern that AIG could have difficulty attracting and retaining talent if “employees believe that their compensation is subject to continued and arbitrary adjustment by the US Treasury.”

Bron: Financial Times

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Op maandag 16 maart 2009 11:55 schreef SeLang het volgende:

[..]

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Op maandag 16 maart 2009 11:46 schreef SeLang het volgende:
AIG counterparties (pdf), document vrijgegeven door AIG zelf (gisteren):
http://www.aig.com/aigweb(...)es_tcm385-153017.pdf

Als ik het goed lees dan is de meerderlheid van het Amerikaanse bailout geld naar Europese banken gegaan (incl ING en Rabo )!
Zal lekker helpen met het draagvlak voor de bailouts

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Op maandag 16 maart 2009 11:46 schreef SeLang het volgende:
Zal lekker helpen met het draagvlak voor de bailouts

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Op dinsdag 17 maart 2009 00:18 schreef Caesu het volgende:

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dat gaat dus ook geen tweede keer gebeuren.
of zouden ze zelfs geld terug gaan vragen van Europa.

soortgelijks gebeurd in Oost-Europa (en IJsland).
Wereldbank/IMF schiet daar te hulp.
maar die bailouts moeten ze meteen terugbetalen aan West-Europese/Scandinavische banken.
ze voelen zich goed belazerd door W-Europa daar in Oost-Europa en nu dus ook de Amerikanen.

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Dear A.I.G., I Quit!
Published: March 24, 2009

The following is a letter sent on Tuesday by Jake DeSantis, an executive vice president of the American International Group’s financial products unit, to Edward M. Liddy, the chief executive of A.I.G.

DEAR Mr. Liddy,

It is with deep regret that I submit my notice of resignation from A.I.G. Financial Products. I hope you take the time to read this entire letter. Before describing the details of my decision, I want to offer some context:

I am proud of everything I have done for the commodity and equity divisions of A.I.G.-F.P. I was in no way involved in — or responsible for — the credit default swap transactions that have hamstrung A.I.G. Nor were more than a handful of the 400 current employees of A.I.G.-F.P. Most of those responsible have left the company and have conspicuously escaped the public outrage.

After 12 months of hard work dismantling the company — during which A.I.G. reassured us many times we would be rewarded in March 2009 — we in the financial products unit have been betrayed by A.I.G. and are being unfairly persecuted by elected officials. In response to this, I will now leave the company and donate my entire post-tax retention payment to those suffering from the global economic downturn. My intent is to keep none of the money myself.

I take this action after 11 years of dedicated, honorable service to A.I.G. I can no longer effectively perform my duties in this dysfunctional environment, nor am I being paid to do so. Like you, I was asked to work for an annual salary of $1, and I agreed out of a sense of duty to the company and to the public officials who have come to its aid. Having now been let down by both, I can no longer justify spending 10, 12, 14 hours a day away from my family for the benefit of those who have let me down.

You and I have never met or spoken to each other, so I’d like to tell you about myself. I was raised by schoolteachers working multiple jobs in a world of closing steel mills. My hard work earned me acceptance to M.I.T., and the institute’s generous financial aid enabled me to attend. I had fulfilled my American dream.

I started at this company in 1998 as an equity trader, became the head of equity and commodity trading and, a couple of years before A.I.G.’s meltdown last September, was named the head of business development for commodities. Over this period the equity and commodity units were consistently profitable — in most years generating net profits of well over $100 million. Most recently, during the dismantling of A.I.G.-F.P., I was an integral player in the pending sale of its well-regarded commodity index business to UBS. As you know, business unit sales like this are crucial to A.I.G.’s effort to repay the American taxpayer.

The profitability of the businesses with which I was associated clearly supported my compensation. I never received any pay resulting from the credit default swaps that are now losing so much money. I did, however, like many others here, lose a significant portion of my life savings in the form of deferred compensation invested in the capital of A.I.G.-F.P. because of those losses. In this way I have personally suffered from this controversial activity — directly as well as indirectly with the rest of the taxpayers.

I have the utmost respect for the civic duty that you are now performing at A.I.G. You are as blameless for these credit default swap losses as I am. You answered your country’s call and you are taking a tremendous beating for it.

But you also are aware that most of the employees of your financial products unit had nothing to do with the large losses. And I am disappointed and frustrated over your lack of support for us. I and many others in the unit feel betrayed that you failed to stand up for us in the face of untrue and unfair accusations from certain members of Congress last Wednesday and from the press over our retention payments, and that you didn’t defend us against the baseless and reckless comments made by the attorneys general of New York and Connecticut.

My guess is that in October, when you learned of these retention contracts, you realized that the employees of the financial products unit needed some incentive to stay and that the contracts, being both ethical and useful, should be left to stand. That’s probably why A.I.G. management assured us on three occasions during that month that the company would “live up to its commitment” to honor the contract guarantees.

That may be why you decided to accelerate by three months more than a quarter of the amounts due under the contracts. That action signified to us your support, and was hardly something that one would do if he truly found the contracts “distasteful.”

That may also be why you authorized the balance of the payments on March 13.

At no time during the past six months that you have been leading A.I.G. did you ask us to revise, renegotiate or break these contracts — until several hours before your appearance last week before Congress.

I think your initial decision to honor the contracts was both ethical and financially astute, but it seems to have been politically unwise. It’s now apparent that you either misunderstood the agreements that you had made — tacit or otherwise — with the Federal Reserve, the Treasury, various members of Congress and Attorney General Andrew Cuomo of New York, or were not strong enough to withstand the shifting political winds.

You’ve now asked the current employees of A.I.G.-F.P. to repay these earnings. As you can imagine, there has been a tremendous amount of serious thought and heated discussion about how we should respond to this breach of trust.

As most of us have done nothing wrong, guilt is not a motivation to surrender our earnings. We have worked 12 long months under these contracts and now deserve to be paid as promised. None of us should be cheated of our payments any more than a plumber should be cheated after he has fixed the pipes but a careless electrician causes a fire that burns down the house.

Many of the employees have, in the past six months, turned down job offers from more stable employers, based on A.I.G.’s assurances that the contracts would be honored. They are now angry about having been misled by A.I.G.’s promises and are not inclined to return the money as a favor to you.

The only real motivation that anyone at A.I.G.-F.P. now has is fear. Mr. Cuomo has threatened to “name and shame,” and his counterpart in Connecticut, Richard Blumenthal, has made similar threats — even though attorneys general are supposed to stand for due process, to conduct trials in courts and not the press.

So what am I to do? There’s no easy answer. I know that because of hard work I have benefited more than most during the economic boom and have saved enough that my family is unlikely to suffer devastating losses during the current bust. Some might argue that members of my profession have been overpaid, and I wouldn’t disagree.

That is why I have decided to donate 100 percent of the effective after-tax proceeds of my retention payment directly to organizations that are helping people who are suffering from the global downturn. This is not a tax-deduction gimmick; I simply believe that I at least deserve to dictate how my earnings are spent, and do not want to see them disappear back into the obscurity of A.I.G.’s or the federal government’s budget. Our earnings have caused such a distraction for so many from the more pressing issues our country faces, and I would like to see my share of it benefit those truly in need.

On March 16 I received a payment from A.I.G. amounting to $742,006.40, after taxes. In light of the uncertainty over the ultimate taxation and legal status of this payment, the actual amount I donate may be less — in fact, it may end up being far less if the recent House bill raising the tax on the retention payments to 90 percent stands. Once all the money is donated, you will immediately receive a list of all recipients.

This choice is right for me. I wish others at A.I.G.-F.P. luck finding peace with their difficult decision, and only hope their judgment is not clouded by fear.

Mr. Liddy, I wish you success in your commitment to return the money extended by the American government, and luck with the continued unwinding of the company’s diverse businesses — especially those remaining credit default swaps. I’ll continue over the short term to help make sure no balls are dropped, but after what’s happened this past week I can’t remain much longer — there is too much bad blood. I’m not sure how you will greet my resignation, but at least Attorney General Blumenthal should be relieved that I’ll leave under my own power and will not need to be “shoved out the door.”

Sincerely,

Jake DeSantis

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Op donderdag 26 maart 2009 00:51 schreef eleusis het volgende:

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Bron: http://www.nytimes.com/2009/03/25/opinion/25desantis.html

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Op donderdag 26 maart 2009 06:44 schreef Lemmeb het volgende:

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hoax

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Op donderdag 26 maart 2009 07:56 schreef Perrin het volgende:

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Hoax in de NYT?

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Op donderdag 26 maart 2009 12:28 schreef Dennism het volgende:
Ben ik het niet volledig mee eens, als deze man en zijn afdeling aan welke hij leiding geeft inderdaad een positief resultaat behaald heeft met zijn business unit, en hierdoor positief bijgedragen heeft aan het negatieve resultaat van AIG en AIG heeft keer op keer gezegt dat de bonussen in deze niet ter discussie gesteld zouden worden daar hij ook al werkt voor $1 per jaar + bonus bij goed resultaat, dan ben ik van mening dat deze bonussen niet ter discussie moeten staan maar gewoon uitgekeerd moeten worden zonder bemoeienis van "lynch mobs" en politieke figuren die wel even munt willen slaan uit de sinds kort populaire gewoonte om alle bonusses terecht of onterecht maar aan de kaak te stellen.

Ik ben ook niet voor alle bonussen welke beloofd c.q. uitgedeeld worden in de wereld. Maar bestaande contracten dien je gewoon te respecteren, en als de bonus criteria behaald worden dienen deze dan ook uitgekeerd te worden.

als iemand goed zijn werk doet en positieve resultaten afleverd heb ik geen moeite met bonussen, wanneer echter iemand er met de pet naar gooit, miiljarden aan afschrijvingen veroorzaakt en dan nog denkt een bonus te kunnen krijgen door wat creatief te boekhouden en daarmee aan te tonen dat er alsnog een positief resultaat behaald is, dan mag de bonus per direct inhouden worden van mij.

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Op donderdag 26 maart 2009 13:35 schreef SeLang het volgende:
Die briefschrijver heeft gewoon groot gelijk.

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AIG Vilification Costs Firm, Loews CEO Tisch Says


By Erik Holm and Erik Schatzker

March 26 (Bloomberg) -- American International Group Inc., the insurer bailed out by the U.S. government, is losing customers and employees amid Congressional vilification of the firm, the head of a competing company said.

Complaints by lawmakers about AIG’s bonus payments are tarnishing the firm and driving commercial insurance customers to rivals, said Loews Corp. Chief Executive Officer James Tisch. Loews owns 90 percent of Chicago-based business insurer CNA Financial Corp.

Tisch’s comments reinforce remarks by AIG’s CEO, Edward Liddy, who has said some bonus payments are needed to retain staff as the insurer seeks to sell businesses and repay the U.S. loan. Executives at competing firms had anticipated that AIG, with financial backing by the government, would undercut rivals to retain customers as it put the businesses on the block.

“It’s helped CNA, but it disappoints me as a taxpayer,” Tisch said in a Bloomberg Television interview. “It should have been much more difficult for us to compete against AIG, but the reality is, I think it’s become dramatically easier. And that’s because Congress has made such a stink over compensation.”

A profitable property-casualty division was the centerpiece of Liddy’s strategy to revive AIG and woo private investors following the government’s initial $85 billion bailout in September. That plan stalled amid deepening losses on subprime investments and Liddy’s difficulty finding buyers for other units, and the taxpayer-funded bailout has since been revised three times and grown to a package valued at $182.5 billion.

AIG ‘Wounded’

AIG privately told the government in February that its U.S. commercial insurance business has struggled to attract customers as employees quit to work for competitors, said a person familiar with the situation.

“The AIG name is so thoroughly wounded and disgraced that we’re probably going to have to change it,” Liddy told a Congressional panel this month. “If I can’t turn this situation around, we run the risk that that business does atrophy.”

AIG, once the world’s largest insurer, has already begun the process of rebranding several units, including the operation that sells commercial coverage in the U.S. A portion of that unit may be offered to the public in a stock sale as part of the plan to pay back the government.

AIG’s decision to pay $165 million in bonuses this month after the latest revision of its bailout triggered a public outcry, and President Barack Obama called the payments “inappropriate.” Liddy has since asked employees at its money- losing Financial Products unit to return bonus money, prompting one company vice president to submit his resignation in an opinion piece published yesterday in the New York Times.

The A Team

“They’ve made sure that the A team and the B team are out the revolving door at AIG, and what’s going to be left is the third and fourth string,” Tisch said. ‘For the life of me, I don’t understand how that is good for the country.”

AIG and CNA compete selling coverage to businesses to protect against worker injuries, property damage and lawsuits.

“We have a leading franchise with great people committed to our clients,” said Christina Pretto, an AIG spokeswoman, when told of Tisch’s comments.

The Government Accountability Office, the investigative arm of Congress, said in a March 18 report that state insurance regulators, brokers and buyers of business coverage “have seen no indications that AIG’s commercial property-casualty insurers are selling coverage at prices inadequate to cover the risk involved.” AIG provided the GAO with examples where the firm lost business, the report said.

Tisch said that if AIG was unable to continue selling coverage, there would be “significant price increases” for commercial insurance buyers.

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Op donderdag 26 maart 2009 13:59 schreef digitaLL het volgende:

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Bron
De enige manier waarop AIG nog marktaandeel kan behouden is door gesubsidieerde lage prijzen te vragen. Hierdoor zal de winstmarge van verzekereraars onder druk komen in een toch al moeilijke tijd, om over het weer opbouwen van reserves maar helemaal te zwijgen.

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Op donderdag 26 maart 2009 18:34 schreef sitting_elfling het volgende:
Hmm, jammer dat ik als ik via de BB terminal kijk naar de bail outs in de wereld en in Amerika zijn de bedragen toch wel wat anders. Niet de 150 biljoen dat in het nieuws kwam. Zal wel niet accuraat zijn dan. ( wel opvallend dat deze informatie op geen manier is te kopieren naar excel of je kunt er zelfs niet eens een printscreen van maken )

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Op donderdag 26 maart 2009 18:34 schreef sitting_elfling het volgende:
Hmm, jammer dat ik als ik via de BB terminal kijk naar de bail outs in de wereld en in Amerika zijn de bedragen toch wel wat anders. Niet de 150 biljoen dat in het nieuws kwam. Zal wel niet accuraat zijn dan. ( wel opvallend dat deze informatie op geen manier is te kopieren naar excel of je kunt er zelfs niet eens een printscreen van maken )

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Op donderdag 26 maart 2009 18:54 schreef Basp1 het volgende:

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Je maakt mij wel nieuwsgierig, welke bedrag heb je het dan over?

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Op donderdag 26 maart 2009 19:28 schreef sitting_elfling het volgende:

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Ik zit net 10 minuten thuis. Misschien zit Veekeend nog achter de terminal anders schrijf ik handmatig de gegevens wel op en gooi het hier op. Persoonlijk denk ik nog steeds dat het foutieve informatie is, en de enige reden waarom ik denk dat ik die informatie niet te kopieren valt op geen enkele manier omdat het bedrijfsgevoelige informatie is. Je kunt namelijk zien dat daar honderden banken in Amerika een bail out hebben gekregen.

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Op zaterdag 28 maart 2009 11:31 schreef Basp1 het volgende:

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Het is toch gewoon een windows scherm, dat moet toch wel op de een of andere manier te capturen zijn?

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Op donderdag 26 maart 2009 19:28 schreef sitting_elfling het volgende:

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Ik zit net 10 minuten thuis. Misschien zit Veekeend nog achter de terminal anders schrijf ik handmatig de gegevens wel op en gooi het hier op. Persoonlijk denk ik nog steeds dat het foutieve informatie is, en de enige reden waarom ik denk dat ik die informatie niet te kopieren valt op geen enkele manier omdat het bedrijfsgevoelige informatie is. Je kunt namelijk zien dat daar honderden banken in Amerika een bail out hebben gekregen.

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Op zaterdag 28 maart 2009 11:31 schreef Basp1 het volgende:

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Het is toch gewoon een windows scherm, dat moet toch wel op de een of andere manier te capturen zijn?

En zo'n grote hoeveelheid banken een bailout, dat kunnen toch weer afgeleide bailout's zijn, omdat ze voor bijv 10% aandelen van een grote bailout bank bezaten hebben ze aan creatieve boekhouding gedaan en 10% van die bailout naar zichzelf toe getrokken.

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Op donderdag 26 maart 2009 19:28 schreef sitting_elfling het volgende:

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Ik zit net 10 minuten thuis. Misschien zit Veekeend nog achter de terminal anders schrijf ik handmatig de gegevens wel op en gooi het hier op. Persoonlijk denk ik nog steeds dat het foutieve informatie is, en de enige reden waarom ik denk dat ik die informatie niet te kopieren valt op geen enkele manier omdat het bedrijfsgevoelige informatie is. Je kunt namelijk zien dat daar honderden banken in Amerika een bail out hebben gekregen.

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Op donderdag 2 april 2009 22:19 schreef Q. het volgende:
Laat AIG gewoon omflikkeren, dan maar geen uitkeringen van die achterlijke CDS's.

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Op vrijdag 3 april 2009 01:27 schreef veekeend het volgende:

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Too big to fail. Denk je echt dat het voordeliger is om die tent om te laten vallen>

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Op vrijdag 3 april 2009 10:17 schreef Maanvis het volgende:

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Voor ONS iig niet ivm de nederlandse bedrijfjes die er belangen bij hebben . Hoe het zit met de amerikaanse belastingbetaler weet ik niet .

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Op vrijdag 3 april 2009 10:30 schreef Lemmeb het volgende:

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De grote vraag is: hebben ze daar nog steeds belangen bij? Of zijn die belangen inmiddels al ingelost?

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Op vrijdag 3 april 2009 10:35 schreef Maanvis het volgende:

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Die belangen zijn wel heule hete aardappels nu hè, dus ik verwacht dat dat niet gelukt is

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AIG may have zero equity value: Citigroup analyst

CHARLOTTE, N.C.

American International Group Inc. shares continued their free fall Thursday after a Citigroup analyst said there is a high probability that the insurer's equity is zero.

Shares dropped $2.83, or 20 percent, to $10.48 in late morning trading.

Last week, shares of the New York-based insurance giant plummeted after a 1-for-20 reverse stock split was approved at the company's annual shareholders meeting on June 30. Shares of AIG closed at $1.16 that day, which is equivalent to $23.20 assuming the reverse split.

In a note to clients Thursday, Citi Investment Research analyst Joshua Shanker said the continued risk of more credit default swap losses and its management's eagerness to sell off businesses at a low value jeopardizes AIG's equity position.

"Such collateral calls could also pressure rating agencies to lower their credit ratings for the company, leading to a similar cycle to the one that the company experienced prior to the massive government intervention in the third quarter," Shanker wrote.

He cut his price target on AIG stock to $14 from the split-adjusted target price of $36. Shanker maintained his "hold" rating.

Once the world's largest insurer, AIG nearly collapsed last year because of losses from credit default swaps. Last week, the company disclosed in a regulatory filing last week that it could face additional losses on those swaps remaining on its books.

Credit default swaps are essentially insurance contracts protecting an investor against default on an underlying investment, such as mortgage-backed securities. Underwriting of the risky contacts were at the heart of AIG's near collapse last fall when it took an initial $85 billion bailout from the government to remain in business.

AIG has since received additional loan packages from the government, which now total $182.5 billion. The government has received an 80 percent stake in the insurer as part of the loan package.

The company is in the process of shedding assets and spinning off some of its subsidiaries in an effort to repay the government and return to profitability.

On Thursday, AIG was said to be discussing a possible deal to sell all or part of one of its foreign life insurance units to MetLife Inc., according to published reports.

Both AIG and MetLife declined to comment on the report.

"While AIG may be able to repay U.S. investment and some debt with core asset sales, the remaining businesses may be those that generate lower return on equity, handicapped by a high debt burden," Shanker wrote.

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Op zaterdag 4 april 2009 01:18 schreef henkway het volgende:
Ja als je de markt helemaal vrijlaat, dan krijg je dit als resultaat vrees ik.

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Lehman sues AIG for $9 million in CDS payments

NEW YORK (Reuters) - Lehman Brothers Holdings Inc (LEHMQ.PK) is suing American International Group (AIG.N) for $9 million in payments the bank says it is owed from credit default swap protection it bought from the insurer on companies including General Motors and Washington Mutual.

In a suit filed with a New York bankruptcy court last week, Lehman alleges that AIG is using the bank's failure as an excuse not to make payments, and that this violates U.S. bankruptcy law.

AIG had the option to terminate the CDSs, which used to insure against a borrower defaulting on its debt, when Lehman failed in September 2008, Lehman said in the filing.

The company failed to do so in order to avoid paying Lehman the $50 million it would have been owed at the time, Lehman said. The insurer appears to be refusing to meet its obligations until the contracts mature or the value of the contracts swings in AIG's favor, the bank said.

A spokesperson for AIG was not immediately available to comment.

Lehman bought protection from AIG on AbitibiBowater (ABWTQ.PK), Washington Mutual (WAMUQ.PK) and General Motors Corp GM.UL, all of which have filed for bankruptcy. Payments on another contract, Station Casinos STN.UL, were triggered when the casino operator failed to make an interest payment on its debt.

Lehman said it has spent $5 million to purchase debt needed to settle the contracts with AIG and is exposed to the risk that the debt will deteriorate in value.

When a borrower defaults on debt, the seller of protection typically pays the buyer the full value of the CDS, in return for the defaulted bonds backing the contract.

AIG bought protection from Lehman on three firms, Fannie Mae, Freddie Mac and Washington Mutual, Lehman said. The insurer has voided its right to collect on these contracts, however, because it failed to give notice to Lehman to settle the contracts within the 30-day deadline, Lehman said.

Payments on Fannie Mae (FNM.N) and Freddie Mac's (FRE.N) CDSs were triggered when the U.S. government put the companies into conservatorship last year.

The case is scheduled to be heard in the United States Bankruptcy Court for the Southern District of New York on October 14.

(Reporting by Karen Brettell; Editing by Dan Grebler)

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Thanks to AIG's regulatory arbitrage -- taking advantage of the fact that its 19 state insurance regulators never conduct examinations at the same time -- AIG may have been able to shift assets among the companies to fool state regulators. If one its companies did not have enough money set aside as reserves against future claims, AIG could move assets to that reserve-deficient company right before the state insurance examiner moved in. And once that examiner was gone, AIG could in theory shift the extra cash to the next reserves-deficient company.

Want an example? Consider AIG affiliate National Union (NU). AIG indicated to Pennsylvania state insurance investigators that it had $33.7 billion in assets at the end of 2008 -- more than enough to protect against $21.9 billion in liabilities. But what the Pennsylvania regulators did not see is that $10.9 billion worth of NU's assets were investments in other AIG affiliates, which are not publicly traded and whose value is hard to measure. Subtract that and you have only $22.8 billion in assets.

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Op zaterdag 1 november 2008 14:00 schreef SeLang het volgende:

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Dat boek heb ik ook in de kast staan, naast "Het Drama Ahold" van Jeroen Smit
Hopelijk levert de huidige crisis mij evenveel geld op (of meer)

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Op vrijdag 14 augustus 2009 16:42 schreef icecreamfarmer_NL het volgende:

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en waarom zijn ze ten onder gegaan dan, in het kort