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What Enron & WorldCom Can Teach Us About Goldman & AIG
Arianna Huffington
Newsweek's latest cover story declares that The Great Recession is over. A Merrill Lynch report concurs, saying, 'The recession is over... We are bullish on global equities.' Goldman Sachs is placing riskier bets on the market than it did before the financial meltdown (and setting aside huge amounts of money to pay its executives). The problem is ...
Smoke Billowing Out of Our Economic Mount Vesuvius
Arianna Huffington
There is currently plenty of alarming smoke pouring out of our economic Vesuvius, but it is being dismissed. Don't worry about economic tremors, we're told, our financial system is back on track, the bailout worked and we'll start our slow but steady climb to recovery. But warning signs are all around us ...
The AIG Bailout:
European Free Riding Enters New Realm
Chris Thomas
American International Group Inc. (NYSE: AIG) used over $90 billion in federal aid to pay out foreign and domestic banks, some of which received United States government bailouts as well. Some of the biggest recipients of AIG money were Goldman Sachs at $12.9 billion, and three European banks -- France's Societe Generale at $11.9 billion, Germany's Deutsche Bank at $11.8 billion, and Britain's Barclays PLC at $8.5 billion. Other names on the list included such stalwarts as Rabobank and Lloyds, which is now state owned.
There is no way of knowing exactly how much Europe has received until the Fed stops acting like the National Security Agency. No wonder Fed Vice Chairman Kohn refused to release to Congress the names of all of AIG's counterparties in his recent testimony.
Why These Big Winners Are Really Losers
You'll never recover from your biggest losses. 2009 11 20 12:41
Trichet warns banks risk addiction to support
Banks risk becoming addicted to cheap central bank cash used to fight the financial crisis and must prepare for its eventual withdrawal, the head of the ECB warned at a Frankfurt banking conference on Friday. 2009 11 20 08:57
Bank bill delayed in House, Senate divided
Progress toward tighter U.S. financial regulation faltered in the U.S. Congress on Thursday as a House committee postponed a pivotal vote and Republicans on a Senate committee aired stubborn opposition. 2009 11 19 21:06
Geithner, under fire, defends AIG bailout
U.S. Treasury Secretary Timothy Geithner on Thursday defended the costly bailout of insurer AIG and urged swift regulatory reform to safeguard the economy from the failure of big financial firms. 2009 11 19 19:45
AIG board meets Tues, no plan on CEO: source
An American International Group Inc's board meeting is expected next week against the backdrop of Chief Executive Robert Benmosche's frustration with the U.S. government's involvement in the insurer's affairs, a source familiar with the matter said on Thursday. 2009 11 19 18:37
UPDATE 4-Geithner, under fire, defends AIG bailout
2009 11 19 14:51
Taiwan Rejects Bid for Nan Shan
2009 11 19 14:14
MSN Money News - AIG
News about American International Group Inc
Hindsight On AIG Is 20/20
Perhaps Uncle Sam gave the insurer's counterparties a backdoor bailout, but at the time, we had bigger worries.
The Recovery Paradox
Pundits and investment professionals say the U.S. recovery is here, but the boots on the ground indicate otherwise.
AIG CEO Watch
Chief executive may be ready to leave; Macy's sales tumble.
How Tech Killed Finance
In the search for blame, why not Moore's Law?
Unemployment Chills Street
10.2% unemployed; Fannie requests $15 billion
How Capitalism Will Save Us
Why Free People and Free Markets Are the Best Answer in Today's Economy.
Obama's Pay Czar: Don't Give Me More Power
Kenneth Feinberg tells lawmakers he's uncomfortable micromanaging more companies. And being managed, it seems.
Familiar Flavor To Financial Reform Bill
Proposed system to regulate firms too big to fail features council that looks remarkably similar to existing advisory group.
Greenberg: I'm Not Poaching From AIG
A report on Tuesday says he's making a run at his former company. Nonsense, he says.
Stocks Struggle
Microsoft earnings and a strong existing home sales report do not encourage traders.
Selling An America No One Wants To Buy
In ''America for Sale,'' artists respond to the recession.
In Pictures: Selling An America No One Wants To Buy
In ''America for Sale,'' artists respond to the recession.
Larry Summers Has A Dream, But No Details
The economic czar speaks of a new social contract between Main Street and Wall Street. Sounds swell, but how about some specifics?
Pay Czar Readies Knife
Big annual bonuses are expected on Wall Street this year. Will cuts to executive compensation at bailed out firms blunt voters' ire?
Obama's Pay Play
The White House clamps down on comp at firms getting taxpayer bailouts. But problems remain.
The Jobless Recovery
The stock market has rallied but unemployment is still high. What does this mean for the future of the recovery?
Executive Education Fights Back
Business schools weather the economic crisis by offering targeted, relevant leadership training.
AIG's Pay Fiasco
The insurer's executive compensation controversy is far from over.
Goldman Sachs Slammed
Meredith Whitney downgrades Goldman; Johnson & Johnson misses on revenues.
AIG Exits Taiwan, Raises $2.2 Billion
AIG can focus on selling its Hong Kong and Japan assets after selling its Taiwan insurance unit.
Buying 'Too Big To Fail'
The large banks will continue to have too-big-to-fail safeguards. Buy Goldman, Barclays and Deutsche Bank.
You Don't Know The Math
The complexities of the financial markets are beyond your broker's abilities.
S&P Weekly Wrap-Up
The S&P 500 made an about-face, canceling the prior week's advance
TARP: Return On Investment
Why the bailout program will not be profitable long-term.
Too Close For Comfort
A new report on the market meltdown shows the costs of the coziness between banks and regulators.
Forbes.com: aig
The latest Forbes.com news on the ticker aig.
AIG: Insurance Winners & Losers (at TheStreet.com)
U.S. Stocks Slip, Dollar Rises (at CNBC)
Major November Expiration Stock "Pinning" Occurring (at Seeking Alpha)
Why These Big Winners Are Really Losers (at Motley Fool)
More AIG Controversy: Maiden Lane III (at Seeking Alpha)
AIG Hits a Snag in Sale of Taiwan Unit (at TheStreet.com)
Goldman's Bonus Plan Draws More Fire (at TheStreet.com)
Deals of the Day: GE Goes Back to Its Pre-Jack Roots (at The Wall Street Journal Online)
Trichet warns banks risk addiction to support (Reuters)
Banks risk becoming addicted to cheap central bank cash used to fight the financial crisis and must prepare for its eventual withdrawal, the head of the ECB warned at a Frankfurt banking conference on Friday.
[video] Options Plays on Hartford Financial Services Group: Mad About Options (at TheStreet.com)
Geithner's Bad Judgement Leaves Taxpayers Holding the Bag (at Seeking Alpha)
Wall Street Breakfast: Must-Know News (at Seeking Alpha)
Bailout Alternatives (at Seeking Alpha)
[$$] Taiwan Regulator Says Nan Shan Bidders Moved Too Early (at The Wall Street Journal Online)
ISDA Names Conrad Voldstad as New CEO (at The Wall Street Journal Online)
Bank bill delayed in U.S. House, Senate divided (at Reuters)
UPDATE - AIG board meets Tues, no plan on CEO -source (at Reuters)
AIG board meets Tues, no plan on CEO: source (Reuters)
An American International Group Inc's board meeting is expected next week against the backdrop of Chief Executive Robert Benmosche's frustration with the U.S. government's involvement in the insurer's affairs, a source familiar with the matter said on Thursday.
Geithner, under fire, defends AIG bailout (Reuters)
UPDATE - Geithner, under fire, defends AIG bailout (at Reuters)
Yahoo! Finance: AIG News
Latest Financial News for AMER INTL GROUP NEW
The Big Squander
By not extracting concessions from bankers during the rescue of A.I.G., policy makers undermined their own credibility and put the broader economy at risk.
Audit Faults New York Fed in A.I.G. Bailout
Officials managing the bailout of the insurance giant may have overpaid other banks to wind down business relationships with A.I.G., Neil Barofsky, the bailout inspector, says.
A.I.G. Chief’s Mission: Save Executive Pay
Robert Benmosche denied a report that he was about to leave American International Group over government restrictions on pay, but said he was “frustrated” over how long it was taking to resolve the issue.
A.I.G. Reports Profit but Warns of Continued Volatility
The insurance giant, which was bailed out last year amid the financial crisis, warned that earnings would remain choppy as the company executes its restructuring plan.
Injunction Sought to Keep A.I.G. Assets in State
Lawyers in California asked a judge to bar A.I.G. from transferring money out of the state.
The Fatal Conceit
The effort to cap executives’ compensation is a good example of overconfidence in government to solve everything.
Ex-A.I.G. Chief Is Back, Luring Talent From Rescued Firm
Maurice R. Greenberg’s new company may soon start to siphon off business from A.I.G., and, therefore, its means to repay its debt to the government.
A.I.G. Sells Taiwan Unit for $2.15 Billion
American International Group announced on Tuesday that it had agreed to sell its Taiwan life insurance unit to a Hong Kong investor group.
A.I.G. to Sell Life Insurance Unit, Nan Shan, to Investors in Hong Kong
The ailing insurer will sell the life insurance subsidiary, which is based in Taiwan, for $2.15 billion to raise cash.
U.S. Pay Czar Tries Again to Trim A.I.G. Bonuses
The federal pay czar is trying to persuade the insurance giant A.I.G. to reduce a coming payment worth $198 million but is running into legal hurdles.
When a Profit Rouses Critics
Goldman Sachs looks set to come out well from its involvement in yet another failing company that is costing taxpayers dearly.
G.A.O. Report Says A.I.G. Is Stabilized
Congress’s research arm said it was not yet clear whether the insurer could ever repay its federal rescue package.
Sentencing for Ex-General Re Executive
The former official, Robert Napier, helped prosecutors convict five ex-employees of General Re and A.I.G.
U.S. Is Finding Its Role in Business Hard to Unwind
A call for more oversight comes as government spending accounts for a bigger share of the nation’s economy than at any time since World War II.
‘An Epidemic of Capital Destruction’
Some famous first words about the economic meltdown.
NYT > American International Group Inc.
American International Group was the largest insurance company in the United States before it suddenly collapsed in September 2008 under the weight of bad bets it made insuring mortgage-backed securities. The company was bailed out by the Federal Reserve, but even after an initial infusion of $85 billion, losses continued to mount and in November the Treasury announced a new rescue package that brought the total cost to $150 billion.
Much of A.I.G., an assortment of businesses that run the gamut from aircraft leasing to life insurance for Indians to retirement plans for elementary-school teachers, remained profitable. But that could not offset losses, primarily from one London-based unit, that reached $25 billion for the third quarter of 2008. Given A.I.G.’s size and the complexity of its deals, federal officials decided that a bailout was preferable to the havoc in international markets that would likely follow bankruptcy.
On March 1, 2009, the federal government agreed to provide an additional $30 billion to A.I.G. and loosen the terms of its huge loan to the insurer, even as the insurance giant reported a $61.7 billion loss, the biggest quarterly loss in history.
The intervention would be the fourth time the United States has had to help the giant insurer avert bankruptcy. The government already owns nearly 80 percent of the A.I.G.’s holding company as a result of earlier interventions, which included a $60 billion loan, a $40 billion purchase of preferred shares and $50 billion to soak up the company’s toxic assets.
By July 2009, when the bailout bill had reached $182 billion, an examination of state regulatory filings revealed more bad news. The dozens of insurance companies that make up A.I.G. showed signs of considerable weakness even after their corporate parent got the biggest bailout in history. In September 2009, the Government Accountability Office said that the bailouts had stabilized A.I.G., but that it was not clear the government would ever recoup its money.
State insurance regulators have said repeatedly that its core insurance operations were sound -- that the financial disaster was caused primarily by a small unit that dealt in exotic derivatives. But state regulatory filings show that A.I.G.'s individual insurance companies have been doing an unusual volume of business with each other for many years -- investing in each other's stocks; borrowing from each other's investment portfolios; and guaranteeing each other's insurance policies. Many of the insurance companies have reduced their own exposure by sending their risks to other companies, often under the same A.I.G. umbrella. This practice may have put billions more at risk.
BIG BONUS PAYMENTS AND CHANGE AT THE TOP
A.I.G. became the target of widespread outrage after it was revealed on March 15 that it had paid $165 million in bonuses two days before, including some to members of the trading unit that had caused its collapse. President Obama ordered the Treasury to see if the payments could be blocked or recovered.
On March 18, at a highly charged Congressional hearing, Edward M. Liddy, A.I.G.’s chairman and chief executive at the time, said he had asked employees making more than $100,000 a year who had shared in the bonus payout to give half the money back, reflecting the public and political disgust at the idea of rewarding the same people who had helped drive the company and the economy into distress.
He said that some had already volunteered to give back 100 percent. He did not provide any details, and resisted releasing the names of those who had received the bonuses, saying some employees had received death threats.
On March 19, spurred on by a tidal wave of public anger, the House of Representatives voted 328 to 93 to get back most of the money by levying a 90 percent tax on bonuses paid by any company accepting more than $5 billion in bailout funds. But almost all the A.I.G. bonuses were returned, leaving little left to tax.
Mr. Liddy was installed by the Federal Reserve when it rescued A.I.G. in September 2008 at a salary of $1 a year. In August 2009, he announced his resignation, after ten grueling months on a job he had taken as a form of public service. He said the job was too big and complex as currently designed.
The A.I.G. board named Robert H. Benmosche, a former head of MetLife, to be the new chief executive. Mr. Benmosche took over from Mr. Liddy on Aug. 10. He is also a director, but is not chairman.
ONCE A BOOMING COMPANY
The company’s complex structure and aggressive approach reflects the determination of the man who built A.I.G., Maurice R. Greenberg, to create a global empire operating in complementary businesses. Not even the company’s annual reports to shareholders or its regulatory filings offer a chart of its complex corporate structure.
Though its name is American, the company is rooted in Asia. According to company lore, its founder, Cornelius Vander Starr, a World War I veteran, traveled to Asia with only 300 Japanese yen (less than $3 today) in his pocket and started the firm in Shanghai in 1919. With a partner, he sold marine and fire insurance and expanded rapidly throughout the Philippines, Indonesia and China by hiring locals as agents and managers, a business strategy A.I.G. uses today. Nearly half of A.I.G.’s 116,000 direct employees — about 62,000 people — are in Asia.
Mr. Greenberg, who joined A.I.G. in 1960, focused on making giant commercial deals, increasing the company’s share of the life insurance business and writing what were, decades ago, unusual types of coverage, like insurance against kidnapping and protection from suits against a company’s officers and directors.
A.I.G.’s problems rest in its London-based financial products unit, part of its financial services group, which is exposed to securities tied to the value of home loans. The financial products group sold credit-default swaps, complex financial contracts allowing buyers to insure securities backed by mortgages. As home values have fallen, the value of the underlying mortgages has declined, and A.I.G. has had to reduce the value of the securities on its books.
The company’s distress followed an unusual period of turmoil at the company. Early in 2005, questions arose about financial transactions that had the effect of making the company’s earnings look better. Mr. Greenberg resigned as chief executive after regulators sent a wave of subpoenas to A.I.G.; eventually it restated earnings covering a five-year period.