AIG Used Fear to Get Latest Bail out

Bloomberg has a most interesting story on how AIG got the latest bail out:

American International Group Inc. appealed for its fourth U.S. rescue by telling regulators the company’s collapse could cripple money-market funds, force European banks to raise capital, cause competing life insurers to fail and wipe out the taxpayers’ stake in the firm.

AIG needed immediate help from the Federal Reserve and Treasury to prevent a “catastrophic” collapse that would be worse for markets than the demise last year of Lehman Brothers Holdings Inc., according to a 21-page draft AIG presentation dated Feb. 26, labeled as “strictly confidential” and circulated among federal and state regulators.

How Bank Regulation Helped Destroy AIG

How Bank Regulation Helped Destroy AIG

What ever changes we make to our financial regulations, hopefully we'll ensure that we can never have another AIG putting the entire global financial system at risk. Unfortunately, our track record of building regulations is terrible. In fact, in many ways the last round of regulatory reform helped cause the disaster in AIG. How could AIG's destruction have been caused by banking regulation? Most people wil probably be surprised by the very idea. After all, they've been told that what really happened to AIG involved unregulated credit default swaps, insurance contracts on bonds that AIG sold across the world. They suspect AIG might have been caused by too little regulation.

Throwing Good Money After Bad - AIG gets another $30 billion

AIG may get another $30 Billion.

AIG has already received $150 billion to back $300 billion in derivatives contracts.

The Wall Street Journal gives a little more detail:

The new funding is intended to support AIG as it absorbs $60 billion in quarterly losses and operational and competitive upheaval. Under the plan, the insurer will repay much of the $40 billion it owes the Federal Reserve loan with equity stakes in two AIG units overseas -- Asia-based American International Assurance Co. and American Life Insurance Co, which operates in 50 countries.

Repayment was originally supposed to be in cash with interest. In addition, AIG will securitize $5-$10 billion in debt, backed with life insurance assets, to further reduce its debt burden.

Just Because it's Math Does it Mean No Criminal Charges? - AIG run like a Scam - New York Times

Just because it's one division and they covered it all up with excuses like complex math, or structured finance does it make it less of a scam and a fraud?

The New York Times article Propping Up a House of Cards has gone a little more in depth on precisely what was going on inside AIG and why (supposedly) it couldn't fail (Joe Nocera Journalist).

James Lieber in Village Voice is a MUST read

What Cooked the World's Economy? It wasn't your overdue mortgage.

By James Lieber

Lieber asks all the hard questions - you know, the ones the answers to which are really, really embarassing. For example, where exactly has the $7 or $8 trillion from the Fed gone to?

In mid-September, when it was on the ropes, AIG received an astonishing $85 billion emergency line of credit from the Fed. Soon, that was supplemented by another $67 billion. Much of that money, to use the government's euphemism, has already been "drawn down." Shamefully, neither Washington nor AIG will explain where the billions went. But the answer is increasingly clear: It went to counterparties who bought derivatives from Cassano's shop in London.

AIG Rewards Derivatives Employees $450 Million Even Though Derivatives Brought Down AIG

Derivatives. You know that shadow banking system that is considered the main cause of the financial meltdown?

You know those not even understood financial vehicles which have caused billions in write downs?

Well, AIG wants to pay the people who create and trade these vehicles $450 million to retain them.

American International Group Inc., the insurer that nearly collapsed because of losses on credit- default swaps, offered about $450 million in retention pay to employees of the unit that sold the derivatives, according to two people familiar with the situation.

More Outrage - AIG Increasing Salaries by Double!

While America hits a record number for food stamps and the Auto industry goes beggin' and pleadin' to save their companies, AIG hands out massive executive bonuses and salaries!

Some executives in the group of 130 recipients will get more than $500,000 to stay through 2009, about 200 percent of their salaries.

The awards may equal 100 percent to 300 percent of an executive’s annual salary, and as much as 100 percent for the next round of payments for lower-paid employees, the person said. The retention payments are several times larger than year- end bonuses, which most of the 130 executives will still get in March, the person said.

AIG Wants Mo' Money

Update: AIG Gets $40 Billion Stake:

In a record bailout of a private company, the government on Monday provided a new $150 billion financial-rescue package to troubled insurance giant American International Group, including $40 billion for partial ownership.

Who is starting to think the bail out is one big sink hole?

The Financial Times article, AIG in Talks for New Bail Out:

AIG is asking the US government for a new bail-out less than two months after the Federal Reserve came to the rescue of the stricken insurer with an $85bn loan, according to people close to the situation.

AIG Bail Out Ineffective - Experts Say Should Have Gone Bankrupt

Interesting article in the Washington Post:

A number of financial experts now fear that the federal government's $143 billion attempt to rescue troubled insurance giant American International Group may not work, and some argue that company shareholders and taxpayers would have been better served by a bankruptcy filing.

Great, now that AIG has already received over $143 billion taxpayer dollars it still maybe tettering on bankruptcy