I have never seen so many lazy people wasteing time, chating at work. You should all be fired, I bet you all hope your boss does not figure you out. Get back to work!
Can someone tell me how much AIG’s execs are contributing to this effort to save AIG? How many millions in compensation did they take prior to this crisis?
I am tired of hearing the word bailout….we have a renegotiated “guido” loan…we are paying handsomely for the money…you idiots have no idea of the ramifications if AIG failed…but it does show the power of the press and the relative ignorance of the public….eventually you will see the money was a good investment for the gov’t…when a company gets a loan does that preclude them eating and drinking and trying to preserve our deteriorating market share? We got a loan just like a mortgage…does the mortgage holder stop you from playing golf or going to a conference…no its a loan get a clue!
Excuse us! We (the taxpayer) were forced to provide AIG this “loan”. We are the ones that have been “bent over” and you’re name calling? Is AIG still paying dividends on their stock or is that not as high a priority as golf?
Dum dum, you would be right if this was a loan from a lending institution, it is not. It is a loan from the government. Public perception, right or wrong, views AIG as a hog at the trough and their party did nothing to dispel this image. Add in excessive compensation packages and you can see why people respond the way they do.
call it a bailout, call it a loan, it doesn’t really matter what you call it. Heck, you could call a turd a diamond but I still wouldn’t give one as an engagement ring.
Whether it’s a loan or a bailout, I think the majority of us are sick of the government jumping in and basically printing money. GM wants help, now American Express wants it. Where is all this money coming from? What happens if the government doesn’t get paid back???
It wont end at that it never does.
AIG cancelled 160 plus corp events to save money. I dont see the ex ceo Hank pitching in any moneny. Maybe got out because he saw the hand writting on the wall and took the parachute. Never the less criminal hearings will take place sooner or latter. What we will be left with is more govt control and higher costs from the bad poor management from people that learned nothing from college ethics classes. What it really amounts to is extortion of our capitolistic root of the country mixed with a poker hand and a mentality that said hey if we get big enough and important enough to society we can rob them and they will have to bail us out in the end for capitolism to survive. This is theft. Is that covered under the D& O error coverage? Why is the Govt bailing them out for years of bad decisions of a few with in an other wise stellar company, AIG is a good company as a whole.
With the large portion of their fiscal demise being a mortgage back issue; would it be wise for AIG and other financial institutes in the sub-prime market to allow the individuals to remain in the homes and restructure their respective mortgages, so that the individuals do not vacate the homes and the companies still have some sort of cash flow coming in to temper the losses? Or does that just mask the problem and delay the inevitable?
gee, all i know is i’ve tried to live within my means, not over extend on credit, and sometimes do without. now me, my children, and grand children will be paying the price for all this mess. and i don’t care, nothing is too big to fail – i thought that was the capitalist way, and why laws against monopolies were drawn. there, i feel better now !
I read that much of AIG’s troubles were with investment risk and credit default swaps. The the hedge fund mangers who insured against this risk shorting the companies into the ground (Lehman) then collecting on policies from AIG. I am I misunderstanding some of this?
They are going to go bankrupt. And all our tax money is going to go into a black hole. This company is too big to let go down? We’re just delaying it and wasting taxpayer money. This capital injection into the FIs is ridiculous too. Were injecting them with cash and still they aren’t lending. The treasury department is talking about Sweden’s bank crisis like a model. Bush appointees talking about a socialist country as a something to mimic. And now they are looking into making sure banks lend to individuals again. Hey maybe individuals should save their money. Maybe badly run companies should go out of business. Im a democrat for crisssake and I think this socialization of private enterprise is more scary than a strong economic downturn. Because were headed for one anyway and spending this money is not just prolonging it.
They are going to go bankrupt. And all our tax money is going to go into a black hole. This company is too big to let go down? We’re just delaying it and wasting taxpayer money. This capital injection into the FIs is ridiculous too. Were injecting them with cash and still they aren’t lending. The treasury department is talking about Sweden’s bank crisis like a model. Bush appointees talking about a socialist country as a something to mimic. And now they are looking into making sure banks lend to individuals again. Hey maybe individuals should save their money. Maybe badly run companies should go out of business. Im a democrat for crisssake and I think this socialization of private enterprise is more scary than a strong economic downturn. Because were headed for one anyway and spending this money is not just prolonging it.
The AIG bailout is nothing more than redistribution of wealth with the poor being forced to pay the rich. Remember, some of the AIG stockholders are worth billions.
Why do I say this? AIG made billions of dollars writing credit-default swaps. They immediately booked all premium as profit (no loss reserves) thus increasing the corporate profit. This increased both the stock price and the dividends for current policyholders. It is also amazingly stupid to assume there can never be any losses just because there haven’t been any.
Now, after this inconceivable level of stupidity causes the organization to go bankrupt, we poor taxpayers are told that it’s our responsibility to make sure these amazingly rich people don’t lose any money because of the stupidity.
AIG was run into bankruptcy by its amazingly stupid management team much like many other companies were in the past. It is not a good company that just needs a little help. ($150 billion is not just a little help)
AIG should be allowed to die with its subsidiaries sold at fire sale prices. A higher price benefits only the stockholders, not the taxpayers. Please don’t tell me the taxpayers are the stockholders – we’re only one step away from Paulson and Bush giving up our 80% ownership – expect it in December.
When you buy a stock, you take your chances. AIG has no guaranteed right to exist regardless of the stupid decisions made by its management team.
We idiots don’t understand the ramifications of a failure of AIG? It seems to me the idiots weren’t smart enough to understand all the CDO’s and the like a few years ago. How have those turned out? Maybe if you can understand it, you should stay away from it. Please, in laymans terms (we’re idiots you know), outline what a failure of AIG would mean. Also, outline how the continued “loans” are going to be successful in allowing the tax-payer to come out ahead. We would really like to be enlighted by someone as gifted as you.
Sir, you have just enough ignorance to make yourself dangerous. CDS did cause the problem…however, had they avoided these instruments the stockholders would have wondered why we were not participating in this (at that time untapped market) very profitable area. Further, w/o fed or state reg you could leverage out to 40 to 1. Unfortunately 2 people in a bank holging comp AIG sank the ship. However, even today the subsidaries or insurance companies were and remain profitable. that means 120,00 people in 130 countries are paying for the immense greed of 2 idiots.had the majority of people at AIG known this they would have terminated their influence early on.You are to stupid to see that and think this thinking is corporately systemic.You also failed to understand the impact of the credit rating agerncies on the luquidity of AIG. You also fail to understand the mark to market accounting principle driving these issues. Continue to read the “paper” written for 6th graders! When you understand sector systemic risk chime in. You were probably against saving western europe as well.
I don’t think the top management at AIG was stupid either. They obviously knew what they were doing and where it would lead. Mistakes? No. Highstakes mismanagement with stockholders money, yes!
Of course the stockholders would have wondered why AIG wasn’t doing this. It is the job of management to explain Finance 101 to the stockholders and tell them that with that amazing level of profit comes an equally high level of risk. They were more than happy to take the outragious profit. Now they should be required to live with the consequences of the risk.
AIG was amazingly stupid for thinking that a return of that extent comes with no risk.
As for the worldwide employees, most of those working for solvent subsidiaries should soon be working for new employers (remember St. Paul and Kemper). There will be some disruption but not what you indicate.
Again, AIG is not some special company that cannot be permitted to fail. I don’t care how many employees were involved. Management let it happen.
Hey dummy. we understand what a loan is. However, our government should not be in the business of giving loans. That’s what banks are for. And if AIG has such a good plan to pay back this “loan” then why won’t any bank take them? hmmmmmmmmm Get a clue dum dum. When a company is run as greedy and maybe even dishonest, do you think it will survive? Do you think it really deserves to survive? Another, honest, profitable company, with a good business plan will take it’s place and maybe even pay their employees better salaries instead of just the CEO, CFO, etc… I say let the whole AIG fail, which I said from day one. However, now we’re stuck. I don’t think we’ll ever get all of our money back with interest, but what’s done is done. I really think Paulson should be fired for starting this whole bailout crap in the firstplace, but then again, he’s helping out all his friends.
“The Fed doesn’t believe it will suffer losses because it is hopeful the market for such distressed investments will recover ”
We switched from all Fed funds to part Fed, part Treasury funds, lowered the interest rate, & lengthened the term of the loan.
But, when all is said and done, what we truly did was double down on our bet that housing prices will recover. The problem is, peak values were a direct result of exotic mortgage programs, no-doc loans, & allowing neg. amortization through “Pay Option (“pick-a-pay”) ARMs” and interest-only loans. People on $50,000 incomes were in $500,000 houses. People on $80,000 incomes were in $800,000 houses. The market will never and more importantly should never return to such ridiculously inflated values.
I think in many years when we look back on this, we will find major problems in 1) the undying assumption that housing prices always go up, and 2) valuations Treasury & Fed puts on the assets they’re buying–in some cases they’re paying 50 cents on the dollar for assets which were marked by other banks at 10 cents on the dollar — this is a gift, not a bail out.
My, my, a bit too busy putting others down to focus. I am impressed by your expansive vocabulary (systemic risk is really cerebral) but not so impressed with your inability to respond to my question. I didn’t ask WHAT happened at AIG. I asked you to explain what the ramifications of not bailing them would be. You simply give a generalization it would ruin the world not to bail them out. How? Since you have such a firm grasp on the mysteries of systemic risk, please outline why the market will be unable to adjust to their failure. We understand there will be pain involved in the failure, but why are you so opposed to letting the market make the adjustments? How does the massive bailout package really solve the problems we have? It seems to me we are only delaying the inevitable correction every bubble market must make. It looks like you are backing the idea of a “central planner” in the government to make everything ok? That solution sounds like the Eastern Europe of old….and we all know how that turned out.
been to Sweden idiot….I would prefer gov’t intervention vs. a world depression…yourself? Not all gov’t intervention is socialism…but with your grasp of the international scenario and worldly events I guess you already knew that…keep reading…your getting warmer!
Still no answer from you.
There will be consequences from letting them fail. Explain what they would be in detail. Also, please let us know how exactly this government intervention is going to make the problem magically go away instead of just prolonging the inevitable and/or creating new problems the government hasn’t had the foresight to see.
Wow. I can’t believe how simple that is! How could I have been so blind? Let’s mortgage our future (inflation, tax burdens, loss of freedoms for example) and all we get is a minor recession. Then everybody back in the pool and resume the fantasy that the financial wepons of mass destruction actually have value. Thanks for an articulate lesson in why 85, er 120, er 150 BILLION of our money was the right answer.
The CEO from Liberty said what everyone else knew. AIG is hurting the market now with their irresponsible underwriting. They don’t have to worry about underwriting for a profit. They just want to bring premium in the door. They have a free pass from the government to continue to conduct bad business.
It’s unfortunate that the government does not just shut them down and run off their claims. That would be the best for everyone in the long run.
Here is all the reading you and everyone else needs to do:
1) When companies do not manage themselves well and fall into financial ruin, they go into bankrupcy.
2) There is a well thought out process for bankrupt companies, their assets are sold off to other companies who have a clue and their debts are paid off.
3) The AIG issue was tied to the CDS and other financial investments, not their primary insurance subs. We all agree.
4) The reason the FED doesn’t want them to fail is only because their financial services unit provides the financial backing to so many other companies (i.e. the CDO’s). The government doesn’t care about the insurance operations.
5) They should be forced to pay the piper NOW. Sell off the life insurance and P&C operations (their truly valuable assets). Pay off the loan (i.e. life line) that the FED provided and resolve the oustanding CDO’s they have on their books.
6) The vast majority of the employees in their insurance operations(like you)will be employed by more stable companies who are not being dragged around the press by the hour.
7) If AIG is left as an aircraft leasing company or a dust ball in the street, who really cares, once the financial mess they created is resolved.
8) Now if your name is really Dumb Dubm, there is only one more thing for YOU to read.
9) Get your resume together!
AIG’s underwriting is solid. Their investment side is what caused this.
Liberty’s CEO, if he made those comments, should know better. Besides, everyone knows Liberty takes on Work Comp accounts at a loss, just to leverage P & C business. They hurt the market more by pricing risks below where they need to be than I’ve ever seen AIG do.
Credit default swaps are what got AIG into financial trouble to the point of near bankruptcy. I think we agree on that. What’s the deal w/CDS’s anyway? I was under the impression that the insurance industry did not want them thought of as ‘insurance’ b/c they would have to be regulated. Herein lies the real crime. Unless this is simplistic, had they been regulated, we wouldn’t be in this mess.
CDS’s were deemed exempt from regulation by the Commodity Futures Modernization Act of 2000, signed into law by President Bill Clinton on December 11, 2000. Prior to passage of this legislation, there was concern that credit (and equity) swaps might be ruled invalid because of the Commodity Exchange Act (CEA)which required that all “futures” contracts must be traded on a regulated exchange unless there was some statutory or regulatory exemption. If credit default swaps were found to be subject to the CEA then they could have been unenforceable. What I still don’t understand is why they are not regulated by the SEC.
I’ve think you’ve got the game right, but the players wrong.
The BANKING industry didn’t want CDS agreements thought of as insurance because then they would have to be regulated by the states, who know what they’re doing — usually.
Another reason why CDS’s aren’t insurance is that the people issuing them didn’t require the buyers to have any insurable interest in the underlying asset! This turned the CDS from an insurance policy on a stream of payments into a bet that that stream would dry up. When some of those assets defaulted, CDS’s required payouts of multiple times what the defaulted amounts would have been.
The insurance industry had nothing to do with it. It was the – FEDERALLY REGULATED – banking industry.
In 20/20 hindsight, it’s obvious that AIG’s position was poorly considered.
Negligent is an awful strong word to be throwing around. I don’t know enough of the details to say one way or the other. It seems to me that the duy of care AIG owed was to analyze the risk of the CDS agreements they wrote and to keep the stockholders appraised of such risks via the board of directors. I am not a stockholder in AIG, so I do not know whether this duty was breached or not.
It seems that AIG was looking for extreme profit. They are in the risk management business & should have known better. In my opinion, their actions were purely motivated by greed. It’s the only explanation
The magnitude of the bailout demanded, rather than proposed by Treasury Secretary Henry Paulson, is astonishing. Take AIG, American International Group, an insurance company worth over a trillion dollars. Paulson says it will cost $85 billion to save AIG.
Is AIG an American company? Now headquartered in New York, it was founded in Shanghai, China in 1919, by an American.
Is AIG in trouble? AIG paid a dividend on Sept. 3, although further dividends are suspended, according to Investment News. The dividend should not be a surprise since AIG has earned $6.2 billion this year. A major subsidiary, Transatlantic Holdings, also gave out a dividend, payable on Sept. 18, noticeably higher than its previous dividend.
On Sept. 16, the U.S. Treasury acquired warrants to buy 80 percent of AIG stock. On Sept. 18, AIG announced that it was plowing more money into its Nigerian operation, Blue Financial Services.
Does AIG need help or does it just have plenty of money to hire lobbyists? How did AIG become so large that it cannot be allowed to fail? It happened by repeated acquisitions of smaller companies. American General, AG, acquired 12 major companies, all insurance and financial, between 1945 and 2001.
In 2001, AIG acquired American General. Since 1990, AIG has also acquired International Lease Finance, 21st Century, HSB Group, Matrix Direct, and insurance interests from General Electric. It also acquired California-based Sun America for $18 billion.
That list only hits the high points. In August, AIG acquired an 18 percent interest in a Chinese company. In June, AIG acquired Ascot. In 2007, AIG spent billions of yen to buy two extremely prestigious office buildings in Japan. In May of 2007, AIG outbid Equity Consortiums to buy the largest phone company in Bulgaria. In 2006, AIG bought Travel Guard International.
AIG is suing seven former executives, including the ex- CEO for $20 billion in misappropriated stock. This information is available from standard business sources.
Classical economics, the supply and demand theory, depends on large numbers of suppliers and large numbers of consumers. The modern economy has large numbers of consumers but mergers and acquisitions have greatly cut down on the number of suppliers. The result is a great concentration of economic power in the hands of CEOs accountable to no one.
Likewise, classical economics assumes that consumers understand the products they buy. When farmers grow corn, there is little doubt that consumers know what corn is and what you can do with it. Do consumers understand insurance policies issued by companies like AIG?
The possibility of forcing U.S. taxpayers to bail out AIG raises grave questions. AIG has operations in over a 100 countries. If it is so important to bail out AIG, are other governments going to contribute? U.S. taxpayers have limits.
What can we learn from past federal takeovers of private companies? In 1971, Congress voted to bail out the Penn Central railroad. The public was told that Penn Central was too important to fail. Critics pointed out that the holding company that owned Penn Central also owned $7 billion in real estate. Why couldn’t the company sell some real estate and modernize the railroad?
The same question applies to AIG. Even if we accept that AIG is in trouble, which is not obvious, it has subsidiaries and properties all over the world. If AIG needs money, it can sell some of them. I’m sure the creditors can wait for these sales to take place.
In the early 1980s, the federal government bailed out Chrysler. In retrospect, this bailout was a success. It rescued an American company and prevented further concentration of the auto industry. My associates at the time included business executives and presidents of small firms. They argued vehemently that Chrysler executives should get no raises or bonuses until the loan was repaid.
Treasury Secretary Henry Paulson is a former CEO of Goldman Sachs, one of the remaining investment firms. While turmoil in the financial markets is a problem for all of us, Paulson does not see these events the way ordinary citizens do. If a trillion dollar bailout package is put into place, average taxpayers will have to pay it off eventually. The longer it takes to retire this debt, the more it will cost Main Street taxpayers.
Financial turmoil is costing Americans but I have seen no calculation that shows that the projected bailout will save most Americans more than it costs them.
How long do we have to make the decision? Years ago an older man with experience in business taught me to be wary of anyone who wants an instant decision. It can be a sign of a con man. Do Republicans understand that they will have to choose between their beloved tax cuts and a trillion dollar bailout? Surely we cannot do both.
Dale L. Gillis lives in Sebring
MORE FROM THIS CHANNELTOPICS IN THIS ARTICLE
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1 purely motivated by greed
2 the idiots 3red handed
AROUND SOUTH MISSISSIPPI
The owner of an engineering firm hoped to make up to $1.5 million over three months by adjusting Hurricane Katrina claims for State Farm, borrowing $150,000 and establishing a line of credit with State Farm Bank to set up shop on the Mississippi Coast in September 2005, according to records filed late Tuesday in federal court.
Because of the arrangement, Forensic Analysis & Engineering Corp. was beholden to State Farm, which wanted to minimize its Hurricane Katrina losses for wind damage, the lawsuit says. Another vendor that adjusted Katrina claims, the independent adjusting firm E.A. Renfroe & Co. Inc., at times owed 80 percent of its income to State Farm, the court records say.
A team of policyholders’
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insurance commisioner wudc
I read with much anticipation the exchange between “dum-dum” and “the idiots.” All name calling and hostility aside, I was, in fact, interested in some details from “dum-dum” of his contention that an AIG downfall would result in worldwide financial calamity.
Also, since much of AIG’s operation still seems to be functioning rather well, it would appear to me that capital would find its way to those well-managed subisidiaries in some form or fashion. In other words, a reorganization or liquidation of what is now AIG does not necessarily have to result in the calamitous outcome foreseen by “dum-dum.”
You must think of the counterparty in these contracts. Thats who is getting the bulk of this $150B loan/bailout.
Back in the day GS + MS (on this side of the pond) and big european banks like UBS + RBS were big players in the collateral bond market. They were making big fees packaging the loans and selling them off. In what they assumed were no risk deals as they bought CDS contracts thru AIG to protect these packages.
Here lies the problem.
Should GS + MS and the host of other European banks be paid for their CDS placed thru AIG?
Of course Paulson thinks so. And he is using tax dollars to create a large guarantee association for these CDS with no dollar cap in the name of AIG.
I think “NO”. There should be caps for these counterparties on the amount they take of US taxpayer provided funds.
Of course this would require AIG to be in receivership which is what they are but under some treasury disguise.
AIG has no intentions of recovering. They would have to give up their greed and higher standard of living in order to do so, for which they have no intentions of doing (in fact they are still laughing at us). They will not be able to turn their profits around nor do they care. They continue to mislead the public. Come on folks they are cancelling the employee pension plans and letting them cash in while they can (with the bail out money). They do not plan on staying in business. This bail out is simply to placate for a short time and keep at bay those who will lose and getting more money for the big CEOs and high paid administrators. They want to make certain that they get all the money the can before they say, “time has run out”. In my opinion the ones calling the shots at AIG are masters of extortion and in the end will simply say, “there was nothing we could do”.
I just didn’t realize that polishing a turd became an art and that there are a lot of high price turd polishers out there.
WAKE UP PEOPLE. THE INSURANCE INDUSTRY IS BROKEN AND IT IS NOT GOING TO BE FIXED UNTIL IT COLLAPSES WITHIN 4 years. DOESN’T ANYONE REALIZE THAT IT IS WHAT WE SPEND ON INSURANCE THAT DRIVES OUR ECONOMY. IT DICTATES TO WHAT OUR BUSINESSES CAN AFFORD TO DO OR NOT DO, THE SAME FOR INDIVIDUALS.
Sara Palin wanted to know why the cost of living is so much higher in Alaska. Well, I would like to know too and I would start at the cost of insurance (auto, home health, disability, work comp, business, etc etc) for the average family, small and large business.
Getting this information will then lead you to why everything else is so damn high.
What is Insurance? FEAR, that’s what it is. FEAR that has been marketed to folks the fear of this or the fear of that. Insurance. When are we going to stop being afraid and stand up, take control.
The industry doesn’t have to be socialized but it will be because of pride. Pride and the inability to analyze and understand what simply needs to be done.
Insurance is not FEAR, it’s more of “odds.” The odds are, you won’t need insurance. However, there still exists a chance that you WILL need it, maybe you’ll get in an accident or get sued for professional negligence, etc. You’re completely free to go uninsured if you want, but I wouldn’t advise it…
While I agree with you that the $150 billion is (most likely) gone, what is your solution? How would you fix the insurance industry, if in fact it’s completely broken?
I have never seen so many lazy people wasteing time, chating at work. You should all be fired, I bet you all hope your boss does not figure you out. Get back to work!
Boss! Is that you?
Can someone tell me how much AIG’s execs are contributing to this effort to save AIG? How many millions in compensation did they take prior to this crisis?
Think of all the cool places to have parties with AIG now that they are getting $150 big ones…
I guess I am too small to suceed now.
This is worse than a divorce, I lost half my net worth and I still have my wife!
Bill, that was priceless! I haven’t laughed that hard since the FIRST 300 TIMES YOU POSTED THAT JOKE!!!
I am tired of hearing the word bailout….we have a renegotiated “guido” loan…we are paying handsomely for the money…you idiots have no idea of the ramifications if AIG failed…but it does show the power of the press and the relative ignorance of the public….eventually you will see the money was a good investment for the gov’t…when a company gets a loan does that preclude them eating and drinking and trying to preserve our deteriorating market share? We got a loan just like a mortgage…does the mortgage holder stop you from playing golf or going to a conference…no its a loan get a clue!
Ralph, I haven’t laughed that hard since you wrote Bill yesterday about that stupid joke. Keep’em coming. Bill give it a rest.
Excuse us! We (the taxpayer) were forced to provide AIG this “loan”. We are the ones that have been “bent over” and you’re name calling? Is AIG still paying dividends on their stock or is that not as high a priority as golf?
Dum dum, you would be right if this was a loan from a lending institution, it is not. It is a loan from the government. Public perception, right or wrong, views AIG as a hog at the trough and their party did nothing to dispel this image. Add in excessive compensation packages and you can see why people respond the way they do.
call it a bailout, call it a loan, it doesn’t really matter what you call it. Heck, you could call a turd a diamond but I still wouldn’t give one as an engagement ring.
Whether it’s a loan or a bailout, I think the majority of us are sick of the government jumping in and basically printing money. GM wants help, now American Express wants it. Where is all this money coming from? What happens if the government doesn’t get paid back???
It wont end at that it never does.
AIG cancelled 160 plus corp events to save money. I dont see the ex ceo Hank pitching in any moneny. Maybe got out because he saw the hand writting on the wall and took the parachute. Never the less criminal hearings will take place sooner or latter. What we will be left with is more govt control and higher costs from the bad poor management from people that learned nothing from college ethics classes. What it really amounts to is extortion of our capitolistic root of the country mixed with a poker hand and a mentality that said hey if we get big enough and important enough to society we can rob them and they will have to bail us out in the end for capitolism to survive. This is theft. Is that covered under the D& O error coverage? Why is the Govt bailing them out for years of bad decisions of a few with in an other wise stellar company, AIG is a good company as a whole.
Hey Ralph, You can also put lipstick on a pig and it is still a pig or a soccer mom. Oh, sorry, I already said that last month.
With the large portion of their fiscal demise being a mortgage back issue; would it be wise for AIG and other financial institutes in the sub-prime market to allow the individuals to remain in the homes and restructure their respective mortgages, so that the individuals do not vacate the homes and the companies still have some sort of cash flow coming in to temper the losses? Or does that just mask the problem and delay the inevitable?
gee, all i know is i’ve tried to live within my means, not over extend on credit, and sometimes do without. now me, my children, and grand children will be paying the price for all this mess. and i don’t care, nothing is too big to fail – i thought that was the capitalist way, and why laws against monopolies were drawn. there, i feel better now !
I read that much of AIG’s troubles were with investment risk and credit default swaps. The the hedge fund mangers who insured against this risk shorting the companies into the ground (Lehman) then collecting on policies from AIG. I am I misunderstanding some of this?
Go back to sleep, jim morrison. We’ll wake you when it’s over.
They are going to go bankrupt. And all our tax money is going to go into a black hole. This company is too big to let go down? We’re just delaying it and wasting taxpayer money. This capital injection into the FIs is ridiculous too. Were injecting them with cash and still they aren’t lending. The treasury department is talking about Sweden’s bank crisis like a model. Bush appointees talking about a socialist country as a something to mimic. And now they are looking into making sure banks lend to individuals again. Hey maybe individuals should save their money. Maybe badly run companies should go out of business. Im a democrat for crisssake and I think this socialization of private enterprise is more scary than a strong economic downturn. Because were headed for one anyway and spending this money is not just prolonging it.
They are going to go bankrupt. And all our tax money is going to go into a black hole. This company is too big to let go down? We’re just delaying it and wasting taxpayer money. This capital injection into the FIs is ridiculous too. Were injecting them with cash and still they aren’t lending. The treasury department is talking about Sweden’s bank crisis like a model. Bush appointees talking about a socialist country as a something to mimic. And now they are looking into making sure banks lend to individuals again. Hey maybe individuals should save their money. Maybe badly run companies should go out of business. Im a democrat for crisssake and I think this socialization of private enterprise is more scary than a strong economic downturn. Because were headed for one anyway and spending this money is not just prolonging it.
The AIG bailout is nothing more than redistribution of wealth with the poor being forced to pay the rich. Remember, some of the AIG stockholders are worth billions.
Why do I say this? AIG made billions of dollars writing credit-default swaps. They immediately booked all premium as profit (no loss reserves) thus increasing the corporate profit. This increased both the stock price and the dividends for current policyholders. It is also amazingly stupid to assume there can never be any losses just because there haven’t been any.
Now, after this inconceivable level of stupidity causes the organization to go bankrupt, we poor taxpayers are told that it’s our responsibility to make sure these amazingly rich people don’t lose any money because of the stupidity.
AIG was run into bankruptcy by its amazingly stupid management team much like many other companies were in the past. It is not a good company that just needs a little help. ($150 billion is not just a little help)
AIG should be allowed to die with its subsidiaries sold at fire sale prices. A higher price benefits only the stockholders, not the taxpayers. Please don’t tell me the taxpayers are the stockholders – we’re only one step away from Paulson and Bush giving up our 80% ownership – expect it in December.
When you buy a stock, you take your chances. AIG has no guaranteed right to exist regardless of the stupid decisions made by its management team.
Can you spell, S-0-C-I-A-L-I-S-M ?
We idiots don’t understand the ramifications of a failure of AIG? It seems to me the idiots weren’t smart enough to understand all the CDO’s and the like a few years ago. How have those turned out? Maybe if you can understand it, you should stay away from it. Please, in laymans terms (we’re idiots you know), outline what a failure of AIG would mean. Also, outline how the continued “loans” are going to be successful in allowing the tax-payer to come out ahead. We would really like to be enlighted by someone as gifted as you.
Sir, you have just enough ignorance to make yourself dangerous. CDS did cause the problem…however, had they avoided these instruments the stockholders would have wondered why we were not participating in this (at that time untapped market) very profitable area. Further, w/o fed or state reg you could leverage out to 40 to 1. Unfortunately 2 people in a bank holging comp AIG sank the ship. However, even today the subsidaries or insurance companies were and remain profitable. that means 120,00 people in 130 countries are paying for the immense greed of 2 idiots.had the majority of people at AIG known this they would have terminated their influence early on.You are to stupid to see that and think this thinking is corporately systemic.You also failed to understand the impact of the credit rating agerncies on the luquidity of AIG. You also fail to understand the mark to market accounting principle driving these issues. Continue to read the “paper” written for 6th graders! When you understand sector systemic risk chime in. You were probably against saving western europe as well.
Cranky. That was nice. Thanks.
keep reading
dum-dum, why all the hostility? Can’t you make a point without calling somebody stupid (especially in a post so rife with simple spelling mistakes)?
Granted, I had to look up a few of the words in your post, but nobody here is STUPID.
I don’t think the top management at AIG was stupid either. They obviously knew what they were doing and where it would lead. Mistakes? No. Highstakes mismanagement with stockholders money, yes!
Hi Dum Dum
Of course the stockholders would have wondered why AIG wasn’t doing this. It is the job of management to explain Finance 101 to the stockholders and tell them that with that amazing level of profit comes an equally high level of risk. They were more than happy to take the outragious profit. Now they should be required to live with the consequences of the risk.
AIG was amazingly stupid for thinking that a return of that extent comes with no risk.
As for the worldwide employees, most of those working for solvent subsidiaries should soon be working for new employers (remember St. Paul and Kemper). There will be some disruption but not what you indicate.
Again, AIG is not some special company that cannot be permitted to fail. I don’t care how many employees were involved. Management let it happen.
Okay Bill, you say that every day. Enough already.
Hey dummy. we understand what a loan is. However, our government should not be in the business of giving loans. That’s what banks are for. And if AIG has such a good plan to pay back this “loan” then why won’t any bank take them? hmmmmmmmmm Get a clue dum dum. When a company is run as greedy and maybe even dishonest, do you think it will survive? Do you think it really deserves to survive? Another, honest, profitable company, with a good business plan will take it’s place and maybe even pay their employees better salaries instead of just the CEO, CFO, etc… I say let the whole AIG fail, which I said from day one. However, now we’re stuck. I don’t think we’ll ever get all of our money back with interest, but what’s done is done. I really think Paulson should be fired for starting this whole bailout crap in the firstplace, but then again, he’s helping out all his friends.
Two very critical excerpts from this article:
“It’s a $150 billion gamble”
and
“The Fed doesn’t believe it will suffer losses because it is hopeful the market for such distressed investments will recover ”
We switched from all Fed funds to part Fed, part Treasury funds, lowered the interest rate, & lengthened the term of the loan.
But, when all is said and done, what we truly did was double down on our bet that housing prices will recover. The problem is, peak values were a direct result of exotic mortgage programs, no-doc loans, & allowing neg. amortization through “Pay Option (“pick-a-pay”) ARMs” and interest-only loans. People on $50,000 incomes were in $500,000 houses. People on $80,000 incomes were in $800,000 houses. The market will never and more importantly should never return to such ridiculously inflated values.
I think in many years when we look back on this, we will find major problems in 1) the undying assumption that housing prices always go up, and 2) valuations Treasury & Fed puts on the assets they’re buying–in some cases they’re paying 50 cents on the dollar for assets which were marked by other banks at 10 cents on the dollar — this is a gift, not a bail out.
dum dum,
My, my, a bit too busy putting others down to focus. I am impressed by your expansive vocabulary (systemic risk is really cerebral) but not so impressed with your inability to respond to my question. I didn’t ask WHAT happened at AIG. I asked you to explain what the ramifications of not bailing them would be. You simply give a generalization it would ruin the world not to bail them out. How? Since you have such a firm grasp on the mysteries of systemic risk, please outline why the market will be unable to adjust to their failure. We understand there will be pain involved in the failure, but why are you so opposed to letting the market make the adjustments? How does the massive bailout package really solve the problems we have? It seems to me we are only delaying the inevitable correction every bubble market must make. It looks like you are backing the idea of a “central planner” in the government to make everything ok? That solution sounds like the Eastern Europe of old….and we all know how that turned out.
been to Sweden idiot….I would prefer gov’t intervention vs. a world depression…yourself? Not all gov’t intervention is socialism…but with your grasp of the international scenario and worldly events I guess you already knew that…keep reading…your getting warmer!
Ralph, you took phonetics…sound it out…not hostile just tired of warfped opinions based in conjecture…keep readin!!
Still no answer from you.
There will be consequences from letting them fail. Explain what they would be in detail. Also, please let us know how exactly this government intervention is going to make the problem magically go away instead of just prolonging the inevitable and/or creating new problems the government hasn’t had the foresight to see.
I thought I did answer you….recession vs global depression…I give up lets all let everything fail…the market will work it out….the idiots prevail
Wow. I can’t believe how simple that is! How could I have been so blind? Let’s mortgage our future (inflation, tax burdens, loss of freedoms for example) and all we get is a minor recession. Then everybody back in the pool and resume the fantasy that the financial wepons of mass destruction actually have value. Thanks for an articulate lesson in why 85, er 120, er 150 BILLION of our money was the right answer.
Flat out, you are just a jerk. Do you act like this without the shelter of the keyboard?
The CEO from Liberty said what everyone else knew. AIG is hurting the market now with their irresponsible underwriting. They don’t have to worry about underwriting for a profit. They just want to bring premium in the door. They have a free pass from the government to continue to conduct bad business.
It’s unfortunate that the government does not just shut them down and run off their claims. That would be the best for everyone in the long run.
Zurich reported good results – they would probably acquire some bolt on P+C components from a dismantled AIG.
Here is all the reading you and everyone else needs to do:
1) When companies do not manage themselves well and fall into financial ruin, they go into bankrupcy.
2) There is a well thought out process for bankrupt companies, their assets are sold off to other companies who have a clue and their debts are paid off.
3) The AIG issue was tied to the CDS and other financial investments, not their primary insurance subs. We all agree.
4) The reason the FED doesn’t want them to fail is only because their financial services unit provides the financial backing to so many other companies (i.e. the CDO’s). The government doesn’t care about the insurance operations.
5) They should be forced to pay the piper NOW. Sell off the life insurance and P&C operations (their truly valuable assets). Pay off the loan (i.e. life line) that the FED provided and resolve the oustanding CDO’s they have on their books.
6) The vast majority of the employees in their insurance operations(like you)will be employed by more stable companies who are not being dragged around the press by the hour.
7) If AIG is left as an aircraft leasing company or a dust ball in the street, who really cares, once the financial mess they created is resolved.
8) Now if your name is really Dumb Dubm, there is only one more thing for YOU to read.
9) Get your resume together!
…AIG will be toast by the end of the year.
Baloney.
AIG’s underwriting is solid. Their investment side is what caused this.
Liberty’s CEO, if he made those comments, should know better. Besides, everyone knows Liberty takes on Work Comp accounts at a loss, just to leverage P & C business. They hurt the market more by pricing risks below where they need to be than I’ve ever seen AIG do.
Credit default swaps are what got AIG into financial trouble to the point of near bankruptcy. I think we agree on that. What’s the deal w/CDS’s anyway? I was under the impression that the insurance industry did not want them thought of as ‘insurance’ b/c they would have to be regulated. Herein lies the real crime. Unless this is simplistic, had they been regulated, we wouldn’t be in this mess.
Good call Zephyr – I think your argument will likely come up in the old state vs. federal insurance regulation argument that is resurfacing.
CDS’s were deemed exempt from regulation by the Commodity Futures Modernization Act of 2000, signed into law by President Bill Clinton on December 11, 2000. Prior to passage of this legislation, there was concern that credit (and equity) swaps might be ruled invalid because of the Commodity Exchange Act (CEA)which required that all “futures” contracts must be traded on a regulated exchange unless there was some statutory or regulatory exemption. If credit default swaps were found to be subject to the CEA then they could have been unenforceable. What I still don’t understand is why they are not regulated by the SEC.
I’ve think you’ve got the game right, but the players wrong.
The BANKING industry didn’t want CDS agreements thought of as insurance because then they would have to be regulated by the states, who know what they’re doing — usually.
Another reason why CDS’s aren’t insurance is that the people issuing them didn’t require the buyers to have any insurable interest in the underlying asset! This turned the CDS from an insurance policy on a stream of payments into a bet that that stream would dry up. When some of those assets defaulted, CDS’s required payouts of multiple times what the defaulted amounts would have been.
The insurance industry had nothing to do with it. It was the – FEDERALLY REGULATED – banking industry.
Ratemaker, is AIG at fault/negligent relative to their involvement in the CDS market?
In 20/20 hindsight, it’s obvious that AIG’s position was poorly considered.
Negligent is an awful strong word to be throwing around. I don’t know enough of the details to say one way or the other. It seems to me that the duy of care AIG owed was to analyze the risk of the CDS agreements they wrote and to keep the stockholders appraised of such risks via the board of directors. I am not a stockholder in AIG, so I do not know whether this duty was breached or not.
It seems that AIG was looking for extreme profit. They are in the risk management business & should have known better. In my opinion, their actions were purely motivated by greed. It’s the only explanation
The magnitude of the bailout demanded, rather than proposed by Treasury Secretary Henry Paulson, is astonishing. Take AIG, American International Group, an insurance company worth over a trillion dollars. Paulson says it will cost $85 billion to save AIG.
Is AIG an American company? Now headquartered in New York, it was founded in Shanghai, China in 1919, by an American.
Is AIG in trouble? AIG paid a dividend on Sept. 3, although further dividends are suspended, according to Investment News. The dividend should not be a surprise since AIG has earned $6.2 billion this year. A major subsidiary, Transatlantic Holdings, also gave out a dividend, payable on Sept. 18, noticeably higher than its previous dividend.
On Sept. 16, the U.S. Treasury acquired warrants to buy 80 percent of AIG stock. On Sept. 18, AIG announced that it was plowing more money into its Nigerian operation, Blue Financial Services.
Does AIG need help or does it just have plenty of money to hire lobbyists? How did AIG become so large that it cannot be allowed to fail? It happened by repeated acquisitions of smaller companies. American General, AG, acquired 12 major companies, all insurance and financial, between 1945 and 2001.
In 2001, AIG acquired American General. Since 1990, AIG has also acquired International Lease Finance, 21st Century, HSB Group, Matrix Direct, and insurance interests from General Electric. It also acquired California-based Sun America for $18 billion.
That list only hits the high points. In August, AIG acquired an 18 percent interest in a Chinese company. In June, AIG acquired Ascot. In 2007, AIG spent billions of yen to buy two extremely prestigious office buildings in Japan. In May of 2007, AIG outbid Equity Consortiums to buy the largest phone company in Bulgaria. In 2006, AIG bought Travel Guard International.
AIG is suing seven former executives, including the ex- CEO for $20 billion in misappropriated stock. This information is available from standard business sources.
Classical economics, the supply and demand theory, depends on large numbers of suppliers and large numbers of consumers. The modern economy has large numbers of consumers but mergers and acquisitions have greatly cut down on the number of suppliers. The result is a great concentration of economic power in the hands of CEOs accountable to no one.
Likewise, classical economics assumes that consumers understand the products they buy. When farmers grow corn, there is little doubt that consumers know what corn is and what you can do with it. Do consumers understand insurance policies issued by companies like AIG?
The possibility of forcing U.S. taxpayers to bail out AIG raises grave questions. AIG has operations in over a 100 countries. If it is so important to bail out AIG, are other governments going to contribute? U.S. taxpayers have limits.
What can we learn from past federal takeovers of private companies? In 1971, Congress voted to bail out the Penn Central railroad. The public was told that Penn Central was too important to fail. Critics pointed out that the holding company that owned Penn Central also owned $7 billion in real estate. Why couldn’t the company sell some real estate and modernize the railroad?
The same question applies to AIG. Even if we accept that AIG is in trouble, which is not obvious, it has subsidiaries and properties all over the world. If AIG needs money, it can sell some of them. I’m sure the creditors can wait for these sales to take place.
In the early 1980s, the federal government bailed out Chrysler. In retrospect, this bailout was a success. It rescued an American company and prevented further concentration of the auto industry. My associates at the time included business executives and presidents of small firms. They argued vehemently that Chrysler executives should get no raises or bonuses until the loan was repaid.
Treasury Secretary Henry Paulson is a former CEO of Goldman Sachs, one of the remaining investment firms. While turmoil in the financial markets is a problem for all of us, Paulson does not see these events the way ordinary citizens do. If a trillion dollar bailout package is put into place, average taxpayers will have to pay it off eventually. The longer it takes to retire this debt, the more it will cost Main Street taxpayers.
Financial turmoil is costing Americans but I have seen no calculation that shows that the projected bailout will save most Americans more than it costs them.
How long do we have to make the decision? Years ago an older man with experience in business taught me to be wary of anyone who wants an instant decision. It can be a sign of a con man. Do Republicans understand that they will have to choose between their beloved tax cuts and a trillion dollar bailout? Surely we cannot do both.
Dale L. Gillis lives in Sebring
MORE FROM THIS CHANNELTOPICS IN THIS ARTICLE
treasury secretary henry paulson • henry paulson • travel guard international • american international group • insurance interests • u s treasury • shanghai china • transatlantic holdings • prestigious office • lease finance • sun america • business sources • chinese company • aig • consortiums • investment news • american general • bailout • smaller companies •
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1 purely motivated by greed
2 the idiots 3red handed
AROUND SOUTH MISSISSIPPI
The owner of an engineering firm hoped to make up to $1.5 million over three months by adjusting Hurricane Katrina claims for State Farm, borrowing $150,000 and establishing a line of credit with State Farm Bank to set up shop on the Mississippi Coast in September 2005, according to records filed late Tuesday in federal court.
Because of the arrangement, Forensic Analysis & Engineering Corp. was beholden to State Farm, which wanted to minimize its Hurricane Katrina losses for wind damage, the lawsuit says. Another vendor that adjusted Katrina claims, the independent adjusting firm E.A. Renfroe & Co. Inc., at times owed 80 percent of its income to State Farm, the court records say.
A team of policyholders’
Subject Posted By Posted On
insurance commisioner wudc
I read with much anticipation the exchange between “dum-dum” and “the idiots.” All name calling and hostility aside, I was, in fact, interested in some details from “dum-dum” of his contention that an AIG downfall would result in worldwide financial calamity.
Also, since much of AIG’s operation still seems to be functioning rather well, it would appear to me that capital would find its way to those well-managed subisidiaries in some form or fashion. In other words, a reorganization or liquidation of what is now AIG does not necessarily have to result in the calamitous outcome foreseen by “dum-dum.”
Get my mind right, “dum-dum.” I’m all ears.
You must think of the counterparty in these contracts. Thats who is getting the bulk of this $150B loan/bailout.
Back in the day GS + MS (on this side of the pond) and big european banks like UBS + RBS were big players in the collateral bond market. They were making big fees packaging the loans and selling them off. In what they assumed were no risk deals as they bought CDS contracts thru AIG to protect these packages.
Here lies the problem.
Should GS + MS and the host of other European banks be paid for their CDS placed thru AIG?
Of course Paulson thinks so. And he is using tax dollars to create a large guarantee association for these CDS with no dollar cap in the name of AIG.
I think “NO”. There should be caps for these counterparties on the amount they take of US taxpayer provided funds.
Of course this would require AIG to be in receivership which is what they are but under some treasury disguise.
The $150 Billion is gone, say good bye.
AIG has no intentions of recovering. They would have to give up their greed and higher standard of living in order to do so, for which they have no intentions of doing (in fact they are still laughing at us). They will not be able to turn their profits around nor do they care. They continue to mislead the public. Come on folks they are cancelling the employee pension plans and letting them cash in while they can (with the bail out money). They do not plan on staying in business. This bail out is simply to placate for a short time and keep at bay those who will lose and getting more money for the big CEOs and high paid administrators. They want to make certain that they get all the money the can before they say, “time has run out”. In my opinion the ones calling the shots at AIG are masters of extortion and in the end will simply say, “there was nothing we could do”.
I just didn’t realize that polishing a turd became an art and that there are a lot of high price turd polishers out there.
WAKE UP PEOPLE. THE INSURANCE INDUSTRY IS BROKEN AND IT IS NOT GOING TO BE FIXED UNTIL IT COLLAPSES WITHIN 4 years. DOESN’T ANYONE REALIZE THAT IT IS WHAT WE SPEND ON INSURANCE THAT DRIVES OUR ECONOMY. IT DICTATES TO WHAT OUR BUSINESSES CAN AFFORD TO DO OR NOT DO, THE SAME FOR INDIVIDUALS.
Sara Palin wanted to know why the cost of living is so much higher in Alaska. Well, I would like to know too and I would start at the cost of insurance (auto, home health, disability, work comp, business, etc etc) for the average family, small and large business.
Getting this information will then lead you to why everything else is so damn high.
What is Insurance? FEAR, that’s what it is. FEAR that has been marketed to folks the fear of this or the fear of that. Insurance. When are we going to stop being afraid and stand up, take control.
The industry doesn’t have to be socialized but it will be because of pride. Pride and the inability to analyze and understand what simply needs to be done.
Insurance is not FEAR, it’s more of “odds.” The odds are, you won’t need insurance. However, there still exists a chance that you WILL need it, maybe you’ll get in an accident or get sued for professional negligence, etc. You’re completely free to go uninsured if you want, but I wouldn’t advise it…
While I agree with you that the $150 billion is (most likely) gone, what is your solution? How would you fix the insurance industry, if in fact it’s completely broken?