AIG

20081029
AIG - Corporate - Government - Politics - Housing
"A Question for A.I.G.: Where Did the Cash Go?" ... "The American International Group is rapidly running through $123 billion in emergency lending provided by the Federal Reserve, raising questions about how a company claiming to be solvent in September could have developed such a big hole by October. Some analysts say at least part of the shortfall must have been there all along, hidden by irregular accounting." ... "“You don’t just suddenly lose $120 billion overnight,” said Donn Vickrey of Gradient Analytics, an independent securities research firm in Scottsdale, Ariz." ... "Mr. Vickery and other analysts are examining the company’s disclosures for clues that the cushion was threadbare and that company officials knew they had major losses months before the bailout." ... "Tantalizing support for this argument comes from what appears to have been a behind-the-scenes clash at the company over how to value some of its derivatives contracts. An accountant brought in by the company because of an earlier scandal was pushed to the sidelines on this issue, and the company’s outside auditor, PricewaterhouseCoopers, warned of a material weakness months before the government bailout." ... "The internal auditor resigned and is now in seclusion, according to a former colleague." ... "These accounting questions are of interest not only because taxpayers are footing the bill at A.I.G. but also because the post-mortems may point to a fundamental flaw in the Fed bailout: the money is buoying an insurer — and its trading partners — whose cash needs could easily exceed the existing government backstop if the housing sector continues to deteriorate." (1, 2, 3) -By Mary Williams Walsh -NYTimes

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20080919
Henry Paulson - Government - Money - Politics - Law - American International Group - Calif
"Bush Asking For $700 Billion Bailout." ... "Struggling to stave off financial catastrophe, the [Republican President] Bush administration on Friday laid out a radical bailout plan with a jawdropping price tag _ a takeover of a half-trillion dollars or more in worthless mortgages and other bad debt held by tottering institutions." ... "Congressional officials said they expected a request for legal authority to buy up the bad loans, at a cost in excess of $500 billion to the government." ... "The federal government already has pledged more than $600 billion [Reuters reports: $900 billion] in the past year to bail out, or help bail out, some of the biggest names in American finance. That includes the rescue of investment bank Bear Stearns in March, the takeover of mortgage giants Fannie Mae and Freddie Mac earlier this month and the takeover of the world's largest insurance company, American International Group, just this week." ... "In a session with House Democrats, they described a plan where the government would in essence set up reverse auctions, putting up money for a class of distressed assets _ such as loans that are delinquent but not in default _ and financial institutions would compete for how little they would accept for the investments, said [California Democratic Representative] Rep. Brad Sherman, D-Calif. [Democratic-California], who participated in the call." ... ""You give them good cash; they give you the worst of the worst," Sherman said of the plan, which he complained that Bush and his economic advisers were trying to panic lawmakers into rubber-stamping." ... "[Republican President Bush's Treasury Secretary Henry] Paulson rejected Democrats' calls to include tighter regulations, corporate reforms or limits on executive compensation as part of the measure, Sherman said. "He's doing his best to paint a picture of the sky falling, and then he says, because the sky's falling, you have to do it my way."" -By Tom Raum and Jeannine Aversa with contributions by Julie Hirschfeld Davis, Martin Crutsinger, Andrew Taylor, Marcy Gordon, David Espo, Jim Abrams, and Joe Bel Bruno -AP via -HuffingtonPost.com

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20080917
Finance - American International Group
"S&P says pressure building on U.S. "AAA" rating." ... "Pressure is building on the pristine "AAA" rating of the United States after a federal bailout of American International Group Inc, the chairman of Standard & Poor's sovereign ratings committee said on Wednesday." ... "The $85 billion bailout of AIG on Tuesday by the U.S. Federal Reserve "has weakened the fiscal profile of the United States," S&P's John Chambers told Reuters in an interview." (1, 2, 3) -By Walden Siew with contributions by Jan Paschal and Chizu Nomiyama -Reuters

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American International Group - Government - Politics - Housing
"Tab for Government Rescues Rises to $900 Billion." ... "The U.S. [United States] Federal Reserve stepped in to rescue insurance giant American International Group from bankruptcy with an $85 billion loan on Tuesday, the latest in a series of bailouts and loans for the financial and housing sectors." ... "The action brings the total tab for government rescues and special loan facilities this year to more than $900 billion." -Reuters via -CNBC

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20080916
Noteworthy - Emergency - Money - Politics - Legal -History - AIG
"U.S. to Take Over AIG in $85 Billion Bailout; Central Banks Inject Cash as Credit Dries Up: Emergency Loan Effectively Gives Government Control of Insurer; Historic Move Would Cap 10 Days That Reshaped U.S. [Unijted States] Finance." ... "[Under Republican President Bush] The U.S. government seized control of American International Group Inc. -- one of the world's biggest insurers -- in an $85 billion deal that signaled the intensity of its concerns about the danger a collapse could pose to the financial system." ... "The step marks a dramatic turnabout for the federal government, which had been strongly resisting overtures from AIG for an emergency loan or some intervention that would prevent the insurer from falling into bankruptcy. Just last weekend, the government essentially pulled the plug on Lehman Brothers Holdings Inc., allowing the big investment bank to go under instead of giving it financial support. This time, the government decided AIG truly was too big to fail." ... "Under terms hammered out Tuesday night, the Fed will lend up to $85 billion to AIG, and the U.S. government will effectively get a 79.9% equity stake in the insurer in the form of warrants called equity participation notes. The two-year loan will carry an interest rate of Libor plus 8.5 percentage points. (Libor, the London interbank offered rate, is a common short-term lending benchmark.)" ... "The loan is secured by AIG's assets, including its profitable insurance businesses, giving the Fed some protection even if markets continue to sink. And if AIG rebounds, taxpayers could reap a big profit through the government's equity stake." ... "It puts the government in control of a private insurer -- a historic development, particularly considering that AIG isn't directly regulated by the federal government. The Fed took the highly unusual step using legal authority granted in the Federal Reserve Act, which allows it to lend to nonbanks under "unusual and exigent" circumstances, something it invoked when Bear Stearns Cos. was rescued in March." ... "The U.S. on Sept. 6 took over mortgage-lending giants Fannie Mae and Freddie Mac as they teetered near collapse." ... "In bailing out AIG, the Federal Reserve appeared to be motivated in part by worries that Wall Street's financial crisis could begin to spill over into seemingly safe investments held by small investors, such as money-market funds that invest in AIG debt." ... "Indeed, on Tuesday the $62 billion Primary Fund from the Reserve, a New York money-market firm, said it "broke the buck" -- that is, its net asset value fell below the $1-a-share level that funds like this must maintain. Breaking the buck is an extremely rare occurrence. The fund was pinched by investments in bonds issued by now collapsing Lehman Brothers." ... "Money-market funds are supposed to be among the safest investments available. No fund in the $3.6 trillion money-market industry has lost money since 1994, when Orange County, Calif., went bankrupt. A number of money-market funds own securities issued by AIG. The firm is also a big insurer of some money-market instruments." -By Matthew Karnitschnig, Deborah Solomon, Liam Pleven and Jon E. Hilsenrath with contributions by Diya Gullapalli, Serena Ng, Damian Paletta and Ashby Jones-WSJ.com

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20050608
• - AIG - "Berkshire Executives Knew AIG Would `Cook the Books,' SEC Says." ... "Executives at Berkshire Hathaway Inc.'s General Re unit knew four years ago that American International Group Inc. would use a reinsurance transaction to ``cook the books,'' according to phone transcripts cited in a suit from regulators." ... "The transaction, which improperly boosted AIG's reserves for claims, sparked an accounting investigation in October that last month led AIG to restate five years of financial reports and lower net income by $3.9 billion, or 10 percent." ... "Shares of Berkshire have fallen 4.2 percent since AIG admitted to improper accounting on March 30, compared with a 1.8 percent gain in the New York Stock Exchange Composite Index." -By David Plumb -Bloomberg 

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20050531
• AIG - New York -  -  - Eliot Spitzer - "AIG Lowers Net Income By $3.9 Billion Over Five Years (Update2)." ... "American International Group Inc., the insurer accused by New York Attorney General Eliot Spitzer of duping investors, reduced net income by $3.9 billion over five years to correct improper accounting and increase reserves for asbestos and environmental claims." ... "Spitzer's suit said [CEO Maurice ``Hank''] Greenberg, 80, directed or had knowledge of at least seven types of deceptive accounting designed to improve AIG's financial results or stock, misleading investors and regulators. Spitzer also is presenting evidence to a New York state grand jury, which will weigh possible criminal indictments, people familiar with the matter said on May 20." -By Jesse Westbrook and David Plumb -Bloomberg 

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20050526
• -  - New York - Eliot Spitzer -"Spitzer files charges against Greenberg and AIG." ... "Eliot Spitzer, New York attorney general, on Thursday filed civil charges against Maurice "Hank" Greenberg and American International Group and accused AIG's deposed chief executive of "manipulating" AIG's books to purposely deceive shareholders." ... "The charges, filed jointly by Mr Spitzer and the New York insurance department, are the first to be brought against AIG and Mr Greenberg by US regulators. Mr Spitzer accuses Mr Greenberg and Howard Smith, former chief financial officer, of "routinely engaging in misleading accounting and financial reporting"." -FT.com via -MSN 

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20050502
• -  - New York - "AIG to restate, slashing net worth." ... "American International Group Inc. said on Sunday it will restate financial reports for much of the last five years, due mainly to accounting errors that will slash about $2.7 billion from its net worth." ... "The world's largest insurer by market value also said it had delayed the filing of its annual 10-K report for 2004 with the U.S. Securities and Exchange Commission for a third time, saying it now expects to file no later than May 31." ... "Since AIG disclosed that it had received subpoenas from New York and federal investigators on February 14, it has lost about $57 billion in market value." -Reuters via -CNN 

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20050330
• - "A.I.G. Discloses Its Accounting Was Improper in Some Deals." ... "The insurance giant American International Group acknowledged today that its accounting for a number of transactions, including a deal with a unit of Warren E. Buffett's company, was improper." ... "According to A.I.G., the accounting missteps and the impact of reclassifying one particular entity would result in a decrease of 2 percent of the company's previously reported unaudited consolidated shareholders equity of $82.9 billion, or $1.7 billion." -By Jenny Anderson -NYTimes 

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