AIG

20090326
Barack Obama - Federal - Enforcement - Financial - Accounting - Politics - American International Group - Consumer - Crises - History - US - International
"Geithner to Propose Vast Expansion Of U.S. Oversight of Financial System." ... "Treasury Secretary Timothy F. Geithner plans to propose today a sweeping expansion of federal authority over the financial system, breaking from an era in which the government stood back from financial markets and allowed participants to decide how much risk to take in the pursuit of profit." ... "The [Democratic President] Obama administration's plan, described by several sources, would extend federal regulation for the first time to all trading in financial derivatives and to companies including large hedge funds and major insurers such as American International Group. The administration also will seek to impose uniform standards on all large financial firms, including banks, an unprecedented step that would place significant limits on the scope and risk of their activities." ... "Most of these initiatives would require legislation." ... "In coming months, the administration plans to detail its strategy in three other areas: protecting consumers, eliminating flaws in existing regulations and enhancing international coordination." ... "The nation's financial regulations are largely an accumulation of responses to financial crises. Federal bank regulation was a product of the Civil War. The Federal Reserve was created early in the 20th century to mitigate a long series of monetary crises. The Great Depression delivered deposit insurance and a federally sponsored mortgage market. In the midst of a modern economic upheaval, the Obama administration is pitching the most significant regulatory expansion since that time." ... "The administration's signature proposal is to vest a single federal agency with the power to police risk across the entire financial system." (1, 2, 3) -By Binyamin Appelbaum and David Cho with contributions by Zachary A. Goldfarb -WashingtonPost

---

20090325
Barack Obama - Government - Financial - Law - Politics - American International Group - US - Global
"Geithner to Outline Major Overhaul of Finance Rules." ... "The [Democratic President] Obama administration will detail on Thursday a wide-ranging plan to overhaul financial regulation by subjecting hedge funds and traders of exotic financial instruments, now among the biggest and most freewheeling players on Wall Street, to potentially strict new government supervision, officials said." ... "The Treasury secretary, Timothy F. Geithner, will outline the broad revamping of the regulatory system, which goes further than expected, in a hearing on Thursday. He is expected to say that the new rules are necessary to prevent a repeat of the excesses that nearly wrecked the global financial system and plunged the economy into a recession." ... "The plan, which would require Congressional approval, would give the government vast new powers over “systemically important” banks and other financial institutions that are so big that their collapse would jeopardize the economy as a whole." ... "The government would have the power to peer into the inner workings of companies that currently escape most federal supervision — insurance companies like the American International Group, multibillion-dollar hedge funds like the Citadel Group and private equity firms like the Carlyle Group or Kohlberg, Kravis & Roberts." ... "But the most striking new proposals, and the ones that may provoke the most heated opposition from the industry, would regulate so-called private pools of capital — hedge funds, private equity funds and venture capital funds — and the gigantic market in financial derivatives, including instruments like credit-default swaps, the insurancelike instruments that allow investors to hedge against bond defaults. " -By Edmund L. Andrews and Louise Story -NYTimes

---

20090206
Corporate - Government - Politics - AIG - Investigation
"Bush overpaid banks in bailout, watchdog says." ... "The [Republican President] Bush administration overpaid tens of billions of dollars for stocks and other assets in its massive bailout last year of Wall Street banks and financial institutions, a new study by a government watchdog says." ... "The Congressional Oversight Panel, in a report released Friday, said last year's overpayments amounted to a taxpayer-financed $78 billion subsidy of the firms." ... "Financially ailing insurance giant American International Group, which the Treasury Department deemed to be too big to be allowed to fail, received $40 billion from the Treasury for assets valued at $14.8 billion, the oversight panel found." -By Jim Kuhnhenn -AP via -Yahoo

---

[PDF] "Congressional Oversight Panel. February Oversight Report. Valuing Treasury's Acquisitions." -Congressional Oversight Panel - http://cop.senate.gov

---

20081209
AIG - Employees - Politics - Federal - Lawmakers - Maryland - New York
"AIG Says More Managers Get Retention Payouts Topping $4 Million." ... "American International Group Inc. [Incorporated], the insurer whose bonuses and perks are under fire from U.S. [United States] lawmakers, offered cash awards to another 38 executives in a retention program with payments of as much as $4 million." ... "The incentives range from $92,500 to $4 million for employees earning salaries between $160,000 and $1 million, Chief Executive Officer Edward Liddy said in a letter dated [2008 December] Dec. 5 to [Maryland Democratic] Representative Elijah Cummings. The New York-based insurer had previously disclosed that 130 managers would get the awards and that one executive would get $3 million." ... "“I remain concerned, as do many American taxpayers, that these retention payments are simply bonuses by another name,” Cummings said in letter responding to Liddy." ... "AIG [American International Group], which received a U.S. rescue package of more than $152 billion, has been criticized for saying it will eliminate bonuses for senior executives while still planning to hand out “cash awards” that double or triple the salaries of some managers." ... "AIG’s managers have overseen a record $37.6 billion in net losses so far this year." -By Hugh Son -Bloomberg

---

20081114
AIG - Workers - Federal - Politics
"AIG to Pay Millions To Top Workers: Move Comes on Heels Of Revised Bailout." ... "American International Group plans to pay out $503 million in deferred compensation to some of its top employees, saying it must tap the funds to keep valuable workers from exiting the troubled insurance giant." ... "News of the payments to top AIG [American International Group] talent comes as the federal government has just put more money into saving the company from bankruptcy, beefing up the total public commitment to $152 billion. Meanwhile, members of Congress are questioning the company's expenditures -- including lavish business trips to resorts -- during a time when taxpayers are on the hook for the bailout." ... "AIG's troubles stem from bad bets it made guaranteeing and buying risky mortgage investments. On Monday, the U.S. [United States] government announced that it would have to expand its rescue of the company to nearly double the $85 billion loan it first provided in September when AIG was unable to pay billions of dollars in claims." ... "The company reported losses this week that brought total losses to $37.63 billion for the first nine months of the year." -By Carol D. Leonnig -WashingtonPost

---

20081112
Henry Paulson - Government - Emergency - Politics - AIG
"Washington's $5 Trillion Tab: Fighting the financial crisis has put the U.S. on the hook for some $5 trillion a report says. So far." ... "For all the fury over [Republican President Bush's] Treasury Secretary Henry Paulson's $700 billion emergency economic relief fund, it seems downright puny when compared to the running total of the government's response to the credit crisis." ... "According to CreditSights, a research firm in New York and London, the U.S. government has put itself on the hook for some $5 trillion, so far, in an attempt to arrest a collapse of the financial system." ... "The Fed has taken on much of that total, including lending a cumulative $1 trillion in overnight or short-term loans since March to primary dealers through its emergency discount window and making a cumulative $1.8 trillion available through its term auction facility, a series of short-term transactions it began making available twice a month in January. It should be noted that a portion of the funds lent in these programs has been repaid and that the totals represent what has been made available." ... "The Fed also took on tens of billions in debt, including $29 billion in debt of Bear Stearns, and made $60 billion of credit available to American International Group  (nyse: AIG -  news  -  people ). It is committing $22.5 billion to set up a special purpose vehicle to manage some of AIG's residential mortgage-backed securities, and it is financing $30 billion of a second fund to hold $70 billion of multi-sector collaterized debt obligations on which AIG wrote credit default swaps." ... "The Treasury, in addition to the $700 billion raised in the Emergency Economic Stabilization Act, agreed to guarantee money market funds against losses up to $50 billion, will inject $40 billion of capital into AIG and is backing the conservatorship of Fannie Mae (nyse: FNM - news - people ) and Freddie Mac (nyse: FRE - news - people ), to the tune of $200 billion." ... "The FDIC [Federal Deposit Insurance Corporation], meanwhile, is guaranteeing $1.5 trillion of senior unsecured bank debt." ... "Not included in the total are the Fed's long-existing discount window lending to commercial banks, the mortgage modification plan announced by regulators on Tuesday, support for the Federal Home Loan Banks and a myriad of other programs." -By Elizabeth Moyer -Forbes

---

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

---

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

---

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

---


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

---

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

---

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 

  ---

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 

  ---

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 

  ---

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 

  ---

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 

  ---