A. I. G. Has Already Burned Through $61 Billion
In a another sign of the depth of mismanagement and trouble in the financial sector, the American International Group announced on Friday that they had already used $61 billion of the $85 billion emergency loan they received from the Federal Reserve only two weeks ago. The company, which claimed it needed the money in order to buy time while they sold off assets, has not yet begun to dispose of those assets.
A.I.G.’s chief executive, Edward M. Liddy, said in a conference call on Friday that he expected the company would also participate in the $700 billion bailout the president signed this week. He said the additional capital might help to ease the company's financial burdens.
http://www.nytimes.com/2008/10/04/business/04insure.html
A.I.G.’s chief executive, Edward M. Liddy, said in a conference call on Friday that he expected the company would also participate in the $700 billion bailout the president signed this week. He said the additional capital might help to ease the company's financial burdens.
http://www.nytimes.com/2008/10/04/business/04insure.html
Advertisement
We should have required equity for these investments. It is the only way we are going to exert common sense control on these companies.
I think there is a case to be made that these companies should be broken into smaller chunks because of conflicts of interest among operating units.
This shit is like Monopoly now for all the accountability involved.
October 4, 2008 8:20 AM | Reply | Permalink
A. I. G. needs to be put into receivership. Clearly, the people who caused the company to fail are not competent to dig them out.
October 4, 2008 8:31 AM | Reply | Permalink
Things fall apart. It's scientific.--David Byrne
Burning Down the House--by Talking Heads
Watch out
You might get what youre after
Cool babies
Strange but not a stranger
Im an ordinary guy
Burning down the house
Hold tight wait till the partys over
Hold tight were in for nasty weather
There has got to be a way
Burning down the house
Heres your ticket pack your bag: time for jumpin overboard
The transportation is here
Close enough but not too far, maybe you know where you are
Fightin fire with fire
All wet
Hey you might need a raincoat
Shakedown
Dreams walking in broad daylight
Three hun-dred six-ty five de-grees
Burning down the house
It was once upon a place sometimes I listen to myself
Gonna come in first place
People on their way to work baby what did you except
Gonna burst into flame
My house
Sout of the ordinary
Thats might
Dont want to hurt nobody
Some things sure can sweep me off my feet
Burning down the house
No visible means of support and you have not seen nuthin yet
Everythings stuck together
I dont know what you expect starring into the tv set
Fighting fire with fire
October 4, 2008 11:10 AM | Reply | Permalink
We did acquire a majority equity position in AIG as part of the loan. That was why everyone screamed "socialism". You are one of the most prolific bashers of the current solution ... do you even know what it is you are bashing?
For a grade-school level synopsis of the original loan(and it's real purpose) ... look here:
http://money.cnn.com/2008/09/16/news/companies/AIG/index.htm?postversion=2008091710
October 4, 2008 3:14 PM | Reply | Permalink
I read the article. It sounds like they used the money for what they anticipated using the money for. Did you think they were taking out a loan ... but didn't expect to spend the money?
AIG is an INSURANCE company not a financial company (responsible for millions of comp/disability payments monthly, life saving surgeries, general health care, etc). You seem to expect them to accomplish the objectives articulated in yesterday's bailout with this loan. Why? The AIG loan was crafted for a different specific purpose.
You (and everyone else) are clearly able to criticize what is being done. What specifically would you do differently and how specifically would it help the CDO/CDS mess (which it the real problem)? Do you even know AIG's exposure on that front?
As someone who owns(along with you) 85% of AIG, it makes a lot of sense to wait until the bailout provides a floor to what are currently valueless assets before they are liquidated. Why in the HELL don't you want AIG to profit - WE OWN IT NOW! Fuck yeah we're gonna participate in the stabilization of assets currently valued as crap. If Goldman is gonna make money - so will the company owned by the American people.
The lack of economic understanding around this place is painful - even to someone who isn't all that economically savvy. Very difficult to tell the wingnuts from the "progressives" these days.
October 4, 2008 2:59 PM | Reply | Permalink
I believe everyone correctly assumed AIG would immediately set about selling off their assets once they got the loan. I certainly assumed that, and since at least some of that $85 billion is my money, I think I've got a right to be at least a little pissed off. It's clear what they're doing. They're doing precisely what opponents of the bailout bill feared these companies would do: they're taking advantage of the situation, and using the bailout money as a new line of credit. That was NOT the intended purpose of the money, and this is abusive and should be illegal.
Ah, jeez. I don't even know where to begin. If you know that they were heavily involved in credit default swaps, how is it that you don't understand that they WERE, in fact, in the financial services industry? It was AIG's investment in bond default insurance that led to their failure. You're oversimplifying.
October 4, 2008 4:19 PM | Reply | Permalink
PS: I think you're assuming that AIG will eventually get back up and running properly again. I seriously doubt it. I WANT them to break up the company, and I WANT them to pay back the loan with the proceeds. This was never supposed to be a long term investment by the taxpayers. This was supposed to buy them time to get out of the bad business they were in. Instead, they're clearly using the money to reinvest in the bad business they were in.
October 4, 2008 4:23 PM | Reply | Permalink
Here--educate yourself on the financial services side of AIG's business. From the Motley Fool:
http://www.fool.com/investing/general/2008/09/17/aigs-failure-is-so-much-bigger-than-enron.aspx
October 4, 2008 4:30 PM | Reply | Permalink
I agree with you, by the way, that the lack of economic understanding around this place is painful sometimes.
October 4, 2008 4:32 PM | Reply | Permalink
AIG is certainly a financial services company. And yes, we got equity and we got a new CEO (the former head of TIAA-CREF one of the country's largest pension funds -- but AIG should not have blown through this much money this quickly and it should not be looking to participate in the bailout. There's something really wrong with this.
October 4, 2008 7:26 PM | Reply | Permalink
They went through a huge amount of money in 14 days! How much more are they going to want? I read that article in a cafe this morning and was not able to keep my mouth shut.
So, in 14 days or less, how much more is Paulson going to want for this bailout?
I agree, AIG should have been taken over (like Fannie and Freddie), not given the "emergency bridge loan". People are losing their jobs, healthcare, and homes - and AIG gets this emergency loan.
But stories like this, on a Saturday during baseball playoffs and football, are not going to get the attention they deserve.
October 4, 2008 6:52 PM | Reply | Permalink
California needs a loan also! So far only $7 billion. How many more states - Who knows (but Alaska certainly should not be one of them.)
http://www.nytimes.com/2008/10/04/us/04calif.html?em
October 4, 2008 7:42 PM | Reply | Permalink
"Nos esperances rendues clairsemees,
-nos cieux nous n'autorisent nul masque."
October 4, 2008 7:56 PM | Reply | Permalink