Financial Webring Forum

by **WynnQuon** » 16 Sep 2008 16:32

You're welcome, you guys. Nice to know that policyholders don't get sideswiped because of corporate shenanigans.

by **parvus** » 16 Sep 2008 19:30

Over to you, Ben:
[url=http://www.marketwatch.com/news/story/aig-brink-bankruptcy-fed-reportedly/story.aspx?guid=%7BE84A4797%2D3EA6%2D40B1%2D9DB5%2DF07B5A7F5BC2%7D]AIG on the brink of bankruptcy
Fed reportedly considers support, but shares of insurer plunge again[/url]

AIG shares slumped 46% to $2.03 during evening action, after dropping 21% in regular trading. Credit default swaps spreads on the insurer's debt widened dramatically by roughly 2,200 basis points to 5,508 suggesting traders are pricing in the potential demise of the company.

New York Gov. David Paterson, who oversees AIG's main regulator, said early Tuesday that the insurer had a day to shore up its finances, stressing that a collapse of the New York-based company would be "catastrophic."

"The market leader is in trouble," said Andy Barile, an independent insurance industry consultant based in Rancho Santa Fe, Calif. "There must be something that can be done to stop this. There are too many financial consequences."

Officials from the Treasury Department, the Federal Reserve and the New York State Insurance Department met at the Federal Reserve Bank of New York with AIG and representatives from other leading financial institutions to discuss possible solutions to the insurer's predicament, according to a Fed spokesman. He declined to comment further.

The Fed is considering some sort of financial support for AIG, the Wall Street Journal reported, citing a person familiar with the situation.

However, by 6.50 p.m. ET on Tuesday, no plans had been announced.

AIG said late Tuesday that it's working on ways to increase short-term liquidity at its parent company. The insurer said it won't reduce capital at any of its subsidiaries or tap into Asian operations for liquidity.

Breaking News: Yes Virginia ...
Fed to Give A.I.G. $85 Billion Loan and Take 80% Stake

In an extraordinary turn, the Federal Reserve agreed Tuesday night to take a nearly 80 percent stake in the troubled giant insurance company, the American International Group, in exchange for an $85 billion loan.

The Federal Reserve and Goldman Sachs and JPMorgan Chase had been trying to arrange a $75 billion loan for the company to stave off the financial crisis caused by complex debt securities and credit default swaps. The Federal Reserve stepped in after it became clear Tuesday afternoon that the banking consortium would not be able to complete the deal.

Without the help, A.I.G. was expected to be forced to file for bankruptcy protection.

The need for the loans became necessary after the major credit ratings agencies downgraded A.I.G. late Monday, a move that likely to have forced the company to turn over billions of dollars in collateral to its derivatives trading partners worsening its financial health.

Until this week, it would have been unthinkable for the Federal Reserve to bail out an insurance company, and A.I.G.’s request for help from the Fed of just a few days ago was rebuffed.

But with the prospect of a giant bankruptcy looming — one with unpredictable consequences for the world financial system — the Fed abandoned precedent and agreed to let the money flow.

Edit: Ah the mispellings with breaking news. :roll:

by **Goofyboy** » 16 Sep 2008 19:44

parvus wrote:Breaking News: Yes Virgina ...

You beat me to it, I'm getting old.

Really, how many more companies are too big to fail? What about the US taxpayers?

by **Shakespeare** » 16 Sep 2008 19:44

Man, that's a big helicopter. :shock:

by **Jo Anne** » 16 Sep 2008 19:57

Please excuse me if this sounds like a stupid question, but why are all these financial firms going bankrupt at exactly the same time??!?

Is it some kind of domino effect?

by **parvus** » 16 Sep 2008 20:17

Sorta.* Just about every financial firm is a counterparty to just about every other one. :roll:

*Some may call it musical chairs, though it need not be treated as such.

by **brad911** » 16 Sep 2008 20:26

Shakespeare wrote:Man, that's a big helicopter.

I believe NASA is currently prepping the two remaining shuttles Shakes....

by **scomac** » 16 Sep 2008 20:28

parvus wrote:Sorta.* Just about every financial firm is a counterparty to just about every other one.

*Some may call it musical chairs, though it need not be treated as such.

More like a house of cards I think...

by **broke** » 16 Sep 2008 20:50

parvus wrote:Breaking News: Yes Virgina ...

There, all fixed :roll:

.....
NEXT!

by **WishingWealth** » 16 Sep 2008 21:27

Let's only hope they keep both CEO & CFO for 6 months and a total of $25 millions to ease the transition to a properly run entity.

These are after all difficult times.

WW

by **NormR** » 16 Sep 2008 22:25

WTF. The folks at Lehman have got to be pissed.

by **lilbit** » 16 Sep 2008 22:32

Yes, Lehman just didn't spread enough toxic waste far and wide enough to qualify for a bailout. :roll:

by **Goofyboy** » 16 Sep 2008 22:41

NormR wrote:WTF.

2+ hours later I'm still at that state.

This was a large insurance company.
They have smart well paid people who's sole job is to hire very smart well paid people who sit around all day thinking about odds and catastrophes and risk and long tails and orange swans with bright purple dots. How did they manage to get to this point?

On the brighter side, I can't wait for the Roger Lowenstein book on this whole mess.

by **parvus** » 16 Sep 2008 22:43

Whilst the personalities might change, would the mechanics of the transactions be all that different — or the risk calculations?

by **Shakespeare** » 16 Sep 2008 22:48

This was a large insurance company. They have smart well paid people

But even more important, they have large numbers of voters who are policy holders and there's an election on. How many retail depositors did Lehman have? Zero.

by **JaydoubleU** » 16 Sep 2008 23:32

The US government is becoming quite the holding company.

When's the IPO?

by **Sensei** » 17 Sep 2008 00:23

Hi,

Just to take the opposite of the flip tack, no matter who is forking over the bridging cash, the AIG bailout seemed necessary. It is a company that can not be allowed to fail. It is networked into just about every other significant financial company around the world in some way. Just check the headlines on MFC for one example.

I often judge a company by its presence in Japan. If while plying my humble trade around Tokyo, I see a giant regional office building for a foreign company, then the company is huge. Lehman, no. Morgan Stanley, Goldman Sachs, Prudential, Seimans, yes. All over 30 stories. AIG, yes. I've even been there for a job interview. It's huge. Most Japanese would not recognize the name AIG, but everyone would recognize Alico or American Home Direct since we are blasted with advertising on TV every single day. Both are run by AIG.

While I'm sure there is lots more 'excitement' on the way, I think we'll see a considerable rise in stock prices tomorrow and perhaps beyond, maybe even AIG's.
:wink:

Cheers

by **WishingWealth** » 17 Sep 2008 00:36

Sensei: I just watched Hank Greenberg for a 40 minutes interview on Charlie Rose and this is his point also.
AIG is a 'beacon' of the US in more than 130 countries.

If people can catch this interview, it's a must see.

I believe it must just be starting out west.
Some PBS stations also rebroadcast the following afternoon.

WW

by **2 yen** » 17 Sep 2008 04:08

Sensei...saw last night's Japanese newscast (can't remember which channel) sponsored by AIG and ONLY AIG, interesting, eh?

by **patriot1** » 17 Sep 2008 04:12

Goofyboy wrote:They have smart well paid people who's sole job is to hire very smart well paid people who sit around all day thinking about odds and catastrophes and risk and long tails and orange swans with bright purple dots. How did they manage to get to this point?

Easy.

When they make big bets and the bets pay off, they get bonuses. When the bets don't pay off, they aren't penalized.

Heads they win, and tails the shareholders (and unfortunately and IMHO unnecessarily the taxpayers) lose.

by **parvus** » 17 Sep 2008 18:06

[url=http://www.marketwatch.com/news/story/aigs-businesses-sale-bailout-buys/story.aspx?guid=%7B18552400%2DD7CC%2D472E%2D9D91%2D3E120CF7F586%7D]AIG businesses for sale as Fed bailout buys time
Analyst estimates the giant's breakup value at more than $150 billion[/url]

by **Sensei** » 17 Sep 2008 18:24

Sensei wrote:Hi,

While I'm sure there is lots more 'excitement' on the way, I think we'll see a considerable rise in stock prices tomorrow and perhaps beyond, maybe even AIG's.

Cheers

Yikes! Sure missed that one, at least for today. :roll:

Tears

by **NormR** » 18 Sep 2008 10:07

AIG out of the DOW, Kraft is in.

by **Norbert Schlenker** » 18 Sep 2008 17:07

Vintage Whine

by **WishingWealth** » 18 Sep 2008 22:10

From Vintage Whine.
(See when there's no fluff posts, people read the links)

The markets are inundated with zombie myths. No matter how many times you stab them through the heart, you just can't kill them.

What's taking down these grand financial icons such as Lehman and A.I.G.? It couldn't possibly be that the companies themselves made stupid and shortsighted decisions. So it must be a conspiracy of the short-sellers. It must be some wrong-headed accounting rules and bad regulation.

In the wake of the demise of A.I.G., we are hearing them again. If only the insurer didn't have to mark its positions to market, this foolishness would have been avoided and we'd all be celebrating how wonderful the economy is. The S.E.C. has rushed to put up restrictions against short-selling again.
...

So it's down to: you don't understand.
No YOU don't.
No I said it first.

One thing's for sure if the foundations of the planet's financial system are dependent on a couple of guys "not doing' some crazy things, this is IMHO what's fundamentally wrong with the system.

But hey I'm only WW

Financial Webring Forum

American International Group (Symbol-AIG)

Who is online