I find it interesting to note that Hank Greenberg is concerned about shareholders not getting a “fair” rate of interest on a loan from the Fed when AIG was supposedly an insurance company not a bank. It was a deliberate attempt to transfer risk without keeping the expected reserves which would have been required if it was a real insurance transfer of risk. Why not admit to playing fast and loose with the rules? In addition, I wonder why no one mentions the elephant in the room that Hank Greenberg was the architect of a phoney risk transfer of reserves to inflate their earnings and declare dividends for shareholders (and Starr Int’l happens to be their largest shareholder)only to get caught by Spitzer, resulting in the restatement of earnings for several years? Why not mention that AIG fell on the moral hazards that were associated with being an insurance company backing uncollateralized CDOs? Isn’t this just Monday-morning quarterbacking? AIG was actually returned from bankruptcy, and with a profit to boot for the US Taxpayer. In a capitalist world, AIG should have closed up shop. Having anything leftover is a tribute to the strength of AIG, but this lawsuit defies the principle of indemnification. Starr should get no more than what they got, because they didn’t get what the deserved. AIG and Starr are still in business aren’t they? Fairness would have been what was left from bankruptcy; why should he profit at all? The high interest rate was fair since it was a bank that bailed them out, instead of going into receivership and having them go to the insurance guarantee funds. I am not a corporate attorney or accountant but I know this much, fairness is not one of the things that come into play in business. This sounds like a child complaining about how he was treated by his siblings. I was told You pays your money and you takes your chances.
I find it quite obvious that the only reason the three stooge; Paulson, Geithner and Bernanke, bailed out AIG was to pay swaps at par to Goldman Sachs.
The term “systemically important” means:
If the AIG goes bankrupt Goldman Sachs will lose money.
That, in essence, is the only reason Paulson, Bernanke, and Geithner were so diligent in stealing equity to secure enough voting power on the board of AIG to vote to pay Goldman Sachs par value for CDS contracts w/ AIG.
I’ll bet Goldman Sachs didn’t lose a nickel when Lehman went bankrupt and if Goldmans Sachs had been exposed to Lehman, the FRBNY and Treasury would have interceded to prevent Goldman Sachs from any losses.
Very interesting. funny no one mentioned that during the crisis. But wouldn’t Goldman Sachs been paid anyway? Goldman Sachs “won” the CDO bet and AIG “lost”. And when AIG found that their pockets weren’t nearly as deep as they represented, was AIG then contemplating bankruptcy as Lehman was forced to admit to? Under-reserving your position, as AIG did, is not only unethical but criminal. Why didn’t Starr institute an action as the largest shareholder and sue AIG’s management? this is all uncharted territory and that seems to be the point that was made that someone had to do something or the markets would implode for sure. These folks are supposed to be professional; how did they get themselves into such a fix that made the resolution via the Fed possible? My opinion is that they got a better deal than they could expect from any other source: they are still in business and whatever “profit” they think they lost is not something that is contemplated in a true insurance transaction. Profit is not an insurable loss. Lost profit is just part of the vargaries of the game they set up. It was the risk they took by playing outside of the “normal” course of business, bordering on fraud. AIG should be glad he Fed bailed them out, Spitzer, had he been involved, would have only been too glad to rosecute them for entering into such a transaction.
I find it interesting to note that Hank Greenberg is concerned about shareholders not getting a “fair” rate of interest on a loan from the Fed when AIG was supposedly an insurance company not a bank. It was a deliberate attempt to transfer risk without keeping the expected reserves which would have been required if it was a real insurance transfer of risk. Why not admit to playing fast and loose with the rules? In addition, I wonder why no one mentions the elephant in the room that Hank Greenberg was the architect of a phoney risk transfer of reserves to inflate their earnings and declare dividends for shareholders (and Starr Int’l happens to be their largest shareholder)only to get caught by Spitzer, resulting in the restatement of earnings for several years? Why not mention that AIG fell on the moral hazards that were associated with being an insurance company backing uncollateralized CDOs? Isn’t this just Monday-morning quarterbacking? AIG was actually returned from bankruptcy, and with a profit to boot for the US Taxpayer. In a capitalist world, AIG should have closed up shop. Having anything leftover is a tribute to the strength of AIG, but this lawsuit defies the principle of indemnification. Starr should get no more than what they got, because they didn’t get what the deserved. AIG and Starr are still in business aren’t they? Fairness would have been what was left from bankruptcy; why should he profit at all? The high interest rate was fair since it was a bank that bailed them out, instead of going into receivership and having them go to the insurance guarantee funds. I am not a corporate attorney or accountant but I know this much, fairness is not one of the things that come into play in business. This sounds like a child complaining about how he was treated by his siblings. I was told You pays your money and you takes your chances.
I find it quite obvious that the only reason the three stooge; Paulson, Geithner and Bernanke, bailed out AIG was to pay swaps at par to Goldman Sachs.
The term “systemically important” means:
If the AIG goes bankrupt Goldman Sachs will lose money.
That, in essence, is the only reason Paulson, Bernanke, and Geithner were so diligent in stealing equity to secure enough voting power on the board of AIG to vote to pay Goldman Sachs par value for CDS contracts w/ AIG.
I’ll bet Goldman Sachs didn’t lose a nickel when Lehman went bankrupt and if Goldmans Sachs had been exposed to Lehman, the FRBNY and Treasury would have interceded to prevent Goldman Sachs from any losses.
Very interesting. funny no one mentioned that during the crisis. But wouldn’t Goldman Sachs been paid anyway? Goldman Sachs “won” the CDO bet and AIG “lost”. And when AIG found that their pockets weren’t nearly as deep as they represented, was AIG then contemplating bankruptcy as Lehman was forced to admit to? Under-reserving your position, as AIG did, is not only unethical but criminal. Why didn’t Starr institute an action as the largest shareholder and sue AIG’s management? this is all uncharted territory and that seems to be the point that was made that someone had to do something or the markets would implode for sure. These folks are supposed to be professional; how did they get themselves into such a fix that made the resolution via the Fed possible? My opinion is that they got a better deal than they could expect from any other source: they are still in business and whatever “profit” they think they lost is not something that is contemplated in a true insurance transaction. Profit is not an insurable loss. Lost profit is just part of the vargaries of the game they set up. It was the risk they took by playing outside of the “normal” course of business, bordering on fraud. AIG should be glad he Fed bailed them out, Spitzer, had he been involved, would have only been too glad to rosecute them for entering into such a transaction.