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Aig

post #1 of 22
Thread Starter 
Let me get this straight. Our government wasted a ton of taxpayer money to bail out AIG and the executives of the company go and waste $440,000 on a retreat for the executives of the company. That's some nice PR when a lot of people feel these companies shouldn't have been bailed out at all.

http://voices.washingtonpost.com/liv...l?hpid=topnews
post #2 of 22
yea, well, i want my 200,000 back.
post #3 of 22
Quote:
Originally Posted by Essayons89 View Post
Let me get this straight. Our government wasted a ton of taxpayer money to bail out AIG and the executives of the company go and waste $440,000 on a retreat for the executives of the company. That's some nice PR when a lot of people feel these companies shouldn't have been bailed out at all.

http://voices.washingtonpost.com/liv...l?hpid=topnews
AND; having already spent all of their 85 billion dollars, they now also have access to a line of additional credit worth 37.8 billion.

That's a lot more management retreats.

http://money.cnn.com/2008/10/08/news...n=money_latest
post #4 of 22
Hey, let's be fair. Those execs were probably pretty stressed out and really needed that retreat.
post #5 of 22
I have zero sympathy for AIG at this point. They created credit default swaps. Basically it was an insurance policy that would cover people if the poopy* mortgage backed securities went down the tubes. Only it wasn't "insurance" because it couldn't be regulated.

The problem with this? There wasn't enough money in the pot to cover all the losses. The largest insurance company in the world didn't do their homework on how insurance works.

*poopy= the strongest word I can use. Feel free to swap in your own profanity. It's like Mad-Libs, only angry.
post #6 of 22
I was sleeping when I heard this on the news. well half sleeping apparently cause I woke up thinking about it wondering If I heard it right on the news or was I just dreaming. I can't believe this. Yet another thing that makes me think these top executives are EVIL.
post #7 of 22
Quote:
Originally Posted by lookingglass View Post
I have zero sympathy for AIG at this point. They created credit default swaps. Basically it was an insurance policy that would cover people if the poopy* mortgage backed securities went down the tubes. Only it wasn't "insurance" because it couldn't be regulated.

The problem with this? There wasn't enough money in the pot to cover all the losses. The largest insurance company in the world didn't do their homework on how insurance works.

*poopy= the strongest word I can use. Feel free to swap in your own profanity. It's like Mad-Libs, only angry.
Did you see that 60 Minutes segment this weekend? It's been a real source of confusion for me how sub prime mortgages could have caused this much financial turmoil. That 60 Minutes segment about "credit swaps" explained it.
post #8 of 22
Quote:
Originally Posted by Essayons89 View Post
Let me get this straight. Our government wasted a ton of taxpayer money to bail out AIG and the executives of the company go and waste $440,000 on a retreat for the executives of the company. That's some nice PR when a lot of people feel these companies shouldn't have been bailed out at all.

http://voices.washingtonpost.com/liv...l?hpid=topnews

I heard about that on Fox on Bill O'Reilly. O'Reilly has a new cause now.
He has promised his viewers to ferret out the people like this, hunt them down and expose them. I can't wait.

I don't know about you but it is irritating as heck when they talk about the 700 billion dollar bail out, we all KNOW it ended up being 850 billion dollar bail out. I suppose the paltry, extra 150 billion dollars is the pork that Reid and Pelosi added on in the dead of night.
post #9 of 22
Quote:
Originally Posted by mschauer View Post
Did you see that 60 Minutes segment this weekend? It's been a real source of confusion for me how sub prime mortgages could have caused this much financial turmoil. That 60 Minutes segment about "credit swaps" explained it.
I did, and I was able to finally understand the whole credit default swaps issue. I work for an insurance company, so I have a workable understanding of how insurance works. For AIG to create a product that wasn't underwritten to cover losses on investments is quite possibly one of the most bone headed I've ever seen.


Sorry this REALLY upsets me.
post #10 of 22
What I would like to know is:

1. Somebody really messed up somewhere.

2. Why aren*t they being tracked down, and investigated, and then prosecuted and jailed, as with ENRON?

3. Why is the bailout money helping THEM, instead of us, who are not pulling in $3 million a year for a salary?

How about bailing out the average Joe, like us? So far, DH and I are doing quite well, but surely there are people have have lost their retirement savings, and will not have time to recoup their losses. I don* mean the sub-prime mortgage people; I have mixed feelings about that, and frankly, do not know all of the details.
post #11 of 22
Quote:
Originally Posted by Yosemite View Post
Hey, let's be fair. Those execs were probably pretty stressed out and really needed that retreat.
Oh, I think they should have some sort of *retreat*--as in, *Retreat to the corner, and hang your head in shame*!
post #12 of 22
You wait. I am betting the next thing us American taxpayer suckers will be told is, "wellllll, technically, they didn't do anything illegal"

I would put money on it. And for sure, all the money is in Swiss bank accounts or in Banks in the Cayman Islands by now.
post #13 of 22
Thread Starter 
Should have let AIG and the rest of them fall by the wayside.
post #14 of 22
I was reading in the paper the other day that one of the companies that asked for a bail out had just that very same day agreed to pay their top executives bonuses in excess of 3 million dollars.

http://www.winnipegfreepress.com/sub...-4878347c.html

Personally I think they all need to take a pay cut as a start to fixing their companies and not depend on the government to do it for them, while keeping their hoggish salaries plus bonuses to boot!

The money that the government is sinking into these companies is just helping the rich get richer. Poor people don't have the money to invest and play the stock market, so the money isn't going into their pockets. The outcry is because the people who can invest are losing money currently, and they don't like it.

The money that has been given to these companies could have paid for a year of health care for 85 million people, and that's including some of the sickest people and people in long term care. I think I read that 43 million Americans don't have health insurance. Why not pay for their health care instead of IMHO wasting it on business that have gotten so big that they finally imploded on themselves?
post #15 of 22
They should have criminal charges filed against them. AIG was showing signs of trouble in 2005 when improprieties with the auditors were discovered. http://www.businessweek.com/magazine...8047_mz011.htm And the previous CEO believes that AIG abandoned any sort internal controls after he left http://www.tradingmarkets.com/.site/...0News/1930641/.

This is exactly like ENRON. They hid so much that they didn't know how much trouble they were in.
post #16 of 22
As far as I can see, they all went belly up because all the evil CEO's gutted the companies taking all their big bonus'. And we get to pay for it. Niiceee
post #17 of 22
The only think I keep thinking about the more i hear about this whole mess is Enron. CEO's...They are the devil reincarnated. Not sure about the spelling on that, but I haven't finished my coffee.

I can't wait for the documentry on this one.
post #18 of 22
It gets better. AIG is hosting a 3-day Ritz-Carlton event for 150 insurance brokers next week. Meanwhile, Wachovia's top brokers are getting treated to an all-expenses-paid cruise of the Greek Isles.
For insensitivity, Wachovia refuses to be outdone
post #19 of 22
Quote:
Originally Posted by jcat View Post
It gets better. AIG is hosting a 3-day Ritz-Carlton event for 150 insurance brokers next week. Meanwhile, Wachovia's top brokers are getting treated to an all-expenses-paid cruise of the Greek Isles.
For insensitivity, Wachovia refuses to be outdone
Oh, swell. I* m sure I*m just one of thousands of happy Wachovia/Citibank/Wells-Fargo/????? bank...customers... Wonder why my bank will be called NEXT week???

Of course, once Citibank get done suing Wachovia for breach of contract, Wachovia/XYZ/1st National Bank of Swindle will ever so kindly pass on what they lost in the lawsuit to their customers--in the form of raised fees.
post #20 of 22
Quote:
Originally Posted by theimp98 View Post
yea, well, i want my 200,000 back.
Me, too.

We agree on something!
post #21 of 22
Those watching news of the financial crisis, the bail-out, the failure of news of the bail-out to unfreeze credit markets, and HOPING that the G7 come out with SOMETHING the market will be happy about are becoming familiar with one of the major underpinnings of the problem: credit default swaps.

I missed the 60-Minute segment on AIG and credit default swaps, but have found some interesting information, if anyone wants to read up.

Here is the background on them - JP Morgan "invented" CDSs as we know them, and was responsible for creating the market for them as we know it today: The Monster That Ate Wall Street: How 'credit default swaps' - an insurance against bad loans - turned from a smart bet into a killer (Newsweek)

A great article that explains the leverage in he credit default swap market and why a $5 trillion loan market can now mean a $50 trillion collapse: Credit Default Swaps: a $50 Trillion Problem (MoneyMorning.com - written April 2008)

The problem was - they weren't insurance, they weren't equity, they weren't bonds - they were "derivatives." So the SEC says it had no supervision of trading in credit derivatives: the Commodities Futures Trading Commission (CFTC) said it wasn't responsible for oversight - and the International Swaps & Derivatives Association (ISDA) said "the industry can police itself." And of COURSE no insurance regulations applied to them - they weren't technically insurance.

Interestingly, a lot of insider trading that couldn't take place in the equity market or bond market apparently took place in the credit default swap market: Hedge funds accounted for 32% of credit default swap sellers and 28% of buyers (in 2006) according to the British Bankers' Association - 2nd to banks in each category. Pension funds and mutual funds made up 7% of the sellers and 4% of the buyers. Potential for abuse of credit-default swaps may lead to regulation (International Herald Tribune, October 2006) ...unfortunately it didn't.

As to AIG, the above article (page 2) says,
Quote:
The reason the federal government stepped in and bailed out AIG was that the insurer was something of a last backstop in the CDS market. While banks and hedge funds were playing both sides of the CDS business—buying and trading them and thus offsetting whatever losses they took—AIG was simply providing the swaps and holding onto them. Had it been allowed to default, everyone who'd bought a CDS contract from the company would have suffered huge losses in the value of the insurance contracts they had purchased, causing them their own credit problems.
So basically AIG was selling the swaps and not buying them. They were on just one side of the trade, so when bonds started defaulting because of the subprime ess, AIG had to pay out - but had nobody paying them - because credit default swaps do NOT work like insurance where, if your models are right, you've got more premiums coming in that insurance you're paying out. If you're just issuing credit default swaps and not selling them - there's no other side to that coin!

The problem is that the market was so lucrative for so long, if companies able to didn't participate, the performance of those companies would likely have lagged their peers - and CEOs, ironically, would have been fired.

Like so many of us have been saying, there's plenty of blame to go around. While Clinton and Greenspan may have been responsible for creating the environment that led to the greatest housing bubble ever, Bush and his admin can be blamed for never dealing with regulation of the CDS markets, despite repeated warnings.

Laurie
post #22 of 22
If the above weren't enough, here's why it was so important to bail out AIG:

How AIG fell apart

Laurie
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