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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 $8.5 billion. Other names on the list included such stalwarts as Rabobank and Lloyds, which is now state owned.
There is no way of knowing exactly how much Europe has received until the Fed stops acting like the National Security Agency. No wonder Fed Vice Chairman Kohn refused to release to Congress the names of all of AIG's counterparties in his recent testimony.
($) My List for the Gallows
Endlessly persecuting the innocent in this financial mess is a corruption of justice. 2010 03 12 10:59
New CEOs, Same Old Trouble
Executive turnover can be a bad sign for your holdings. 2010 03 12 09:34
Elizabeth Warren on Your Bailout Investments
The head of the Congressional Oversight Panel talks about consumer protection and "too big to fail." 2010 03 12 07:49
Tiptoeing Across the Straits
2010 03 12 07:16
Bank reform talks fail, Dodd to go solo
Chances of a broad overhaul of U.S. financial regulation dimmed on Thursday after bipartisan Senate talks collapsed, jeopardizing a top Obama administration priority and boosting bank share prices. 2010 03 11 17:51
Big majority of Americans wants Wall Street regulation
WASHINGTON (Reuters) - An overwhelming majority of Americans wants Wall Street subjected to tougher regulation in the aftermath of the bank bailout and the bonus scandals that have rocked the U.S. financial sector, according to a Harris poll released on Thursday. 2010 03 11 11:03
3 Stocks I Saw on TV
San Diego (TheStreet) -- Dan Fitzpatrick examines three stocks viewed on Fast Money. Today's stocks include American International Group, Citigroup and CF Industries. 2010 03 11 08:06
Wednesday's Hottest Stocks
Yesterday's market is today's moneymaking road map. 2010 03 11 07:01
MSN Money News - AIG
News about American International Group Inc
Intelligent Billionaires
Steve Forbes sat down with seven of the people on Forbes' Billionaires list. Here are some lessons for success.
AIG's Progress Squeezes Shorts
Rounding up more than $50 billion in asset sales set off a chain reaction in the insurer's shares.
Gains Build On Rally In Financials, Tech
Equities in flux Wednesday, even as AIG, Citi and the Nasdaq roar higher.
AIG Squeezed Higher
Short-covering could be driving the insurer's rally, but at least credit recent asset sales with an assist.
Greece And Its Bad Company
A bond sale wasn't enough to remove Greece from the list of countries deemed the greatest credit risks.
March 9, 2009: The Day Stocks Bottomed Out
A look back at what was happening at the bottom of the bear market.
Stocks Cool Off After Weekend
Merger activity dominates a mixed trading session. AIG sells second unit, McDonald's posts higher sales.
AIG's Next Step
After cashing in its most valuable chips, the government-aided insurer is depending on its core business.
AIG Sells Alico
Yahoo! upgraded; Royal Dutch Shell makes a bid for Arrow Energy.
Street Waffles After Rally
Stocks struggle to hold earlier gains; S&P 500 risks breaking six-day winning streak.
Street Sways After Latest AIG Deal
Insurer locks up $15.5 billion deal for Alico; stocks start week with modest gains.
AIG Wraps Up Deal With MetLife
Insurer's cupboard doesn't have much left after raising billions with sales of Alico, AIA.
Quality Trumps Junk
Since last March, stocks with lousy fundamentals were the star performers. Finally that's changing.
Enough With The Economic Crisis Books Already!
If you haven't started writing your book about the financial crisis, don't.
AIG Cashing In Biggest Chips
After selling Alico and AIA, and divesting stake in Transatlantic, the insurer will have dealt its best cards.
Apple's iPad Launch
Tablet to be available for purchase April 3; Analyst raises profit expectations.
AIG To Shed Transatlantic Stake
As it continues to unravel its holdings and repay government loans, AIG will sell its 14% stake in the reinsurer.
Aflac's Jeff Charney
CMO on the insurance company's brand strategy and most famous campaign character.
Street Posts Slim Tuesday Gains
Deal news for the likes of Terra Industries, Dow Chemical and AIG can't provide more than a fleeting boost.
Manchester United 'Not For Sale' As Red Knights Prepare To Lay Siege
Dissident fans want to oust the Glazers from the world's most iconic and valuable sports team brand.
Dealmaking Comes Alive
The M&A comeback is gaining momentum, giving a boost to stocks of all stripes. Industrials still await their turn.
Calmer Seas Buoy AIG
Better market conditions grease the skids for $35B sale of Asian life insurance business, other asset sales.
Pound Plunges On British Political Worries
Sterling fell as political uncertainty added to an already grim economic outlook for the U.K.
More Work Ahead For AIG
Insurer sells Asian life insurance biz for $35B, but there are other asset sales in the work to pay back taxpayers.
Hostile Bid For OSI Pharma
AIG sells AIA; Dish surprises with new subscribers.
Forbes.com: aig
The latest Forbes.com news on the ticker aig.
AMERICAN INTERNATIONAL GROUP INC Financials (EDGAR Online Financials)
Diane Garnick's Guide to the Fine Art of Failure (TechTicker)
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New CEOs, Same Old Trouble (at Motley Fool)
Stocks Struggle as Market Digests Consumer Reports (at CNBC)
[$$] My List for the Gallows (at RealMoney by TheStreet.com)
Elizabeth Warren on Your Bailout Investments (at Motley Fool)
Thursday's Hottest Stocks (at Motley Fool)
3 Stocks I Saw on TV (TheStreet.com TV)
[$$] Tiptoeing Across the Straits (at The Wall Street Journal Online)
AIG, MetLife: Top-Performing Insurance Stocks (at TheStreet.com)
Poll Shows Vast Majority for More Wall St. Regulation (at The New York Times)
Fed Joins A.I.G. Loss-Sharing Pact With MetLife (at The New York Times)
[$$] AIG Workers to Give Up $45 Million to Uncle Sam (at The Wall Street Journal Online)
UPDATE - US SEC head prods Congress on derivatives rules (at Reuters)
Citigroup Gains Buoy Markets; Dow Up 44.51 (at The Wall Street Journal Online)
Lehman Senior VP Warned Auditors About Repo 105 (at The Wall Street Journal Online)
Citigroup Leads Bull Charge: Dave's Daily (at TheStreet.com)
Your First Move For Friday March 12th (at CNBC)
Intelligent Billionaires (at Forbes.com)
[video] Fast Flash: AIG (at CNBC)
Yahoo! Finance: AIG News
Latest Financial News for American International Group, I
A.I.G.'s Sale of Its Taiwan Unit in Regulatory Limbo
Officials are investigating whether the buyers are funded by China, a historical foe of the island nation.
European Leaders Call for Crackdown on Derivatives
The multiple, and at times seemingly conflicted roles, of investment banks like Goldman Sachs have also drawn scrutiny.
A.I.G. Sells Unit to MetLife
The latest deals leave the American International Group with no obvious sales to raise the money to pay the rest of its debt, roughly $50 billion, to the U.S.
Putting High Takeover Premiums in Perspective
Bid premiums are high, but the purchase prices in some recent takeovers look like bargains relative to previous stock market values.
A.I.G. Is Selling Another Stake to Raise Money
The American International Group said on Friday that it planned to sell its 13.8 percent stake in a reinsurer, Transatlantic Holdings.
British Company to Buy A.I.G.’s Asian Unit
The $35 billion sale would allow A.I.G. to make the biggest repayment yet toward the $180 billion bailout.
An Insurance Bid That Invites Risk
Prudential of Britain’s audacious $35.5 billion offer for the Asian life insurance business of the American International Group is reminiscent of pre-crisis mega-deals.
A.I.G. Unit Said to Be Near Sale to a British Company
Prudential P.L.C. is expected to acquire the American International Group’s big life insurance business in Asia for about $35.5 billion.
A.I.G. Posts Loss of $11 Billion on Higher Claims
The insurance giant attributed most of its $11 billion loss for the year to a fourth-quarter charge taken to reflect that its bailout had been restructured.
Tax Question Arises Over Sale of an A.I.G. Unit
A.I.G.’s efforts to sell one of its biggest life insurance companies to pay back its rescue loans are snagged on a tax issue that may require a special ruling by the Internal Revenue Service.
Another Wrinkle in the A.I.G. Bailout
If the rescued insurer sells Alico, the government could end up owning stock in yet another company.
A.I.G. Will Use a Grading System for Bonuses
The new plan is meant to quiet critics who believe Wall Street financial firms overpay even their underperforming employees.
Testy Conflict With Goldman Helped Push A.I.G. to Edge
The bank’s demands for billions of dollars from the insurer bled it of cash, which the government later provided.
$100 Million Bonus Plan at A.I.G. Draws Fire
The giant insurer and recipient of the biggest government bailout in history agreed to cut its next round of bonuses by $20 million.
Risky Trading Wasn’t Just on the Fringe at A.I.G.
The conventional wisdom was that risky derivatives from a London unit brought down A.I.G. But a Delaware division was gambling as well.
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.
In March 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.
By July, when the bailout bill had reached $182 billion, an examination of state regulatory filings revealed more bad news. The dozens of insurance companies making up A.I.G. showed signs of considerable weakness even after their corporate parent got the biggest bailout in history. In September, the Government Accountability Office said the bailouts had stabilized A.I.G., but it was not clear that the government would ever recoup its money.
In December the company, after dropping "A.I.G." from its sales brochures in June, leapfrogged its competitors and reclaimed a title it held for many years before its bailout — the top seller of fixed annuities to bank customers. The contracts are being offered under the names of two subsidiaries, Western National Life and First SunAmerica.
On March 1, 2010, Prudential of Britain said it had agreed to buy A.I.G.'s life insurance business in Asia. The sale, valued at $35.5 billion, would lead to the biggest repayment yet toward the more than $180 billion that the U.S. government has invested in the company.
Another sale was announced in March, with the A.I.G. agreeing to sell a second major insurance unit, this one to MetLife for about $15.5 billion. But even after wiping away $51 billion of debt, A.I.G. will owe roughly $50 billion to the government.
Big Bonus Payments and a Change at the Top
A.I.G. became the target of widespread outrage after it was revealed on March 15, 2009, 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.
In early 2010 the company agreed to cut employee bonuses by $20 million and is expected to distribute about $100 million. But the reductions may not be enough to appease the company's critics, who do not accept the company's argument that it has to honor contracts established before its government bailout.
A.I.G. first promised the retention bonuses to keep people working at its financial products unit, which traded in the derivatives that imploded in September 2008, leading to the biggest government bailout in history.
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 10 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 the 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.
Two Big Billion-Dollar Sales Announced
With Prudential of Britain's agreement to buy A.I.G.'s life insurance business, announced on March 1, 2010, the insurer would become the indisputable leader in Asia. The combined group would be the leading life insurer in Hong Kong, Singapore, Malaysia, Indonesia, Vietnam, Thailand and the Philippines and the leading foreign life insurance business in China and India, Prudential said.
A 162-year-old company — which is not related to Prudential Financial in the United States — the British Prudential already draws a large part of its revenue from Asia, with more than 11 million policyholders in 13 markets.
A week later, the sale of A.I.G.'s Alico to MetLife was announced. A.I.G. will get about $15.5 billion, which with the Prudential deal raises about $51 billion to repay its taxpayer-financed rescue.
That amount is likely to keep slowly growing, because the government made large sums available — $182 billion in a number of forms — when it came to the rescue. The company has not drawn down that full amount, but every few months it taps a billion or two billion more, to finance its restructuring or bolster its insurance units.