AIG will get another 30 billion dollars of tax payer money today. This marks the 4th time AIG has required bailout funds, total as of this latest is at $180 Billion dollars for this company alone. Can you imagine fucking up the company you manage so badly that $180 Billion dollars still doesn't get you out of the hole?

In a nutshell AIG wrote unfunded insurance policies for investors buying mortgage backed securities, they basically wrote policies they knew they couldn't pay on. They never thought they would have to pay on them as they thought real estate was a sure bet that would never come down. In any other business that would be fraud, it would be the same as my business getting paid for a website and not doing the job.

Unfortunately the regulations that would have prevented this were removed by politicians, both democrat and republican, who were bought and paid for by companies like AIG, Bear Stearns, Citi Group, BOFA and others.

And we all get to pay for it. Welcome to "let the market..."

I can't for a second understand how this can be justified...again ;(

I can't for a second understand how this can be justified...again ;(


Lets not forget even with this money AIG is posting a $62 billion dollar loss for the quarter...thats quarter...a 3 month period.

The politicians play the "too big to fail" card...I say bullshit...let it fail..let Citi Group fail, let BofA fail.

Oh and lets not forget, AIG along with those banks are currently spending tens of millions of dollars lobbying congress to remove the provision in the mortgage bill that would allow bankruptcy judges to adjust a mortgage to make it affordable to the homeowner. The current bankruptcy laws allow that for investors and vacation home owners but not for families that own only their single home.

So if you are wealthy you can have your mortgages, note the plural, adjusted to better suit your desired payments but if you are a middle class homeowner looking to save your home you cant.

I'd be wary of any reporting that doesn't differentiate between AIG corporate and the one subsidiary that's sucking air.

I'd be wary of any reporting that doesn't differentiate between AIG corporate and the one subsidiary that's sucking air.

That one part of AIG has caused the WHOLE company problems. They don't have the money to pay on life insurance or any other policy. It's indefensible...

They don't have the money to pay on life insurance or any other policy. It's indefensible...

That's why I'd be wary of the sensationalist reporting. You end up thinking things like that are true.

I know you didn't read that anywhere. No one's going to be dumb enough to publish that and get sued. They're happy to imply that the whole affair is in trouble though (either being uninformed themselves, or happily misleading).

http://www.insurancejournal.com/news/national/2009/03/02/98278.htm

Im reminded of Tom Hanks in the Money Pit.

GPz-j3bfq3E

That's why I'd be wary of the sensationalist reporting. You end up thinking things like that are true.

I know you didn't read that anywhere. No one's going to be dumb enough to publish that and get sued. They're happy to imply that the whole affair is in trouble though (either being uninformed themselves, or happily misleading).


So are you saying you think AIG is healthy and viable but for one "rogue" subsidiary?

The only part of AIG in trouble is the group that did CDOs and the namesake holding company. The other groups doing insurance are fine. In fact, they're probably going to sell those profitable divisions to pay back the government loans.

You can't run insurance fast and loose like that anyway. They're required to escrow significant amounts of the premiums.

edit: The reason that normal insurance regulations on the escrow bit didn't work here is because they were insuring ridiculously leveraged derivatives for which almost no one understood the full liability. Certainly a bad move on their part, but hardly indicative of any systemic failure in the larger group of companies.

Unfortunately they are not required to escrow significant amounts of the premiums.

Sure they are. Where are you getting this FUD that health, life, business, etc insurance by AIG subsidiaries is in any danger? Substantiate that. Source?

Sure they are. Where are you getting this FUD that health, life, business, etc insurance by AIG subsidiaries is in any danger? Substantiate that. Source?


I'll do you one better...show me where they are solvent. If what you say is fact then why don't they simply split the company and have AIG good and AIG bad?

AIG's general insurance business swung to a loss on $2.8 billion in net realized capital losses. General insurance net premiums dropped 16.3 percent to $9.2 billion, and net premiums earned fell 5.9 percent to nearly $11 billion.

I'll do you one better...show me where they are solvent. If what you say is fact then why don't they simply split the company and have AIG good and AIG bad?

Like I already said in this thread, that's exactly what they're going to do. They're planning on selling off some of the profitable divisions to pay back the government loans. That's actually one of the original conditions of all of these loans.

AIG is just a holding company. A brand name.

For example, some of the real AIG insurance (e.g. property, life, business, etc) is underwritten by the Lexington Insurance Company, not AIG Insurance. If "AIG" fails, Lexington does not. "AIG" isn't allowed to skim any money out of Lexington either (hence their selling them off, rather than sucking them dry).

There are quite a few insulated companies doing the actual insurance work here, and they're in fine shape. A little research beyond the hyped up CNN headlines makes that obvious.

AIG stocks at 38 cents a share! time to buy!!!

Like I already said in this thread, that's exactly what they're going to do. They're planning on selling off some of the profitable divisions to pay back the government loans. That's actually one of the original conditions of all of these loans.

AIG is just a holding company. A brand name.

For example, some of the real AIG insurance (e.g. property, life, business, etc) is underwritten by the Lexington Insurance Company, not AIG Insurance. If "AIG" fails, Lexington does not. "AIG" isn't allowed to skim any money out of Lexington either (hence their selling them off, rather than sucking them dry).

There are quite a few insulated companies doing the actual insurance work here, and they're in fine shape. A little research beyond the hyped up CNN headlines makes that obvious.


So all in all it is only the AIG name that is in bad shape? Not their insurance business? I apologize I was under the obvious mistaken impression that it was one of these insurance subsidiaries that wrote policies that were not backed by any collateral. So who is in financial trouble here? No one? Why the need for money? There is no $62 billion quarterly loss? What is your relationship to AIG or its subsidiaries?

No, the AIG holding company is in horrible shape, however they do have profitable, solvent subsidiaries as well as functionally ultrabankrupt ones. In order for the rest of the working ones to survive, AIG is doing some account hopskotch with the help of the government that will hopefully leave all the solvent ones still operating, some not under the AIG name anymore.

Just to keep it simple, let's pretend you have group A, group I, and group G. Group A and I have several billion dollars of insurance policies that are functioning in the normal way. Their overall worth, ignoring liabilities, is 10 billion. Group G royally fucked up and is so overleveraged on non-existent assets that it is worth negative 30 billion.

In order for all the customers of A and I to not lose their insurance, the government gives AIG 30 billion to pretend it isn't bankrupt while it sells off groups A and I to pay the government back once G has been sorted out. (in theory).

In order for all the customers of A and I to not lose their insurance, the government gives AIG 30 billion to pretend it isn't bankrupt while it sells off groups A and I to pay the government back once G has been sorted out. (in theory).

LOL...I understand. You have shown my point. The problem is the only buyer right now appears to be China and from what I understand that is not a great situation as they are looking for it to be sold to them at an extraordinary discount.

I think to say that any headlines concerning this is sensationalism is clearly wrong. The true risk is that if it all fails, whether or not it is a small subsidiary that has caused it really doesn't matter if the whole thing collapses.

It has been clear from day one that the economic situation has a root cause in mortgage backed securities and if for nothing else other than to show it, AIG is a prime example of the shortsighted and greed that pervades the "free unregulated" market.

Unfortunately I wasn't looking for a debate on corporate structure and divisions vs subsidiaries and their responsibilities in the larger parent company. What my point was is that this company sold a product they knew they could not deliver and because laws and regulations were written by their lobbyists and put in place by equally corrupt politicians and due to this, no one is legally responsible. That is not sensationalism that is the facts.

In summary (theoretical summary) there were 377 people in the part of AIG that caused this. Those 377 people received billions of dollars in bonuses along with their regular salaries for designing, promoting and selling a product they clearly knew they could not deliver. I guess we can deflect it to become an AIG is solid its just a small portion that sucks so no need to stop and stare move on please nothing to see here...and why not? It seems this is the way of modern corporate culture.

Rover, you're all over the place here.

Unfortunately I wasn't looking for a debate on corporate structure and divisions vs subsidiaries and their responsibilities in the larger parent company. What my point was is that this company sold a product they knew they could not deliver and because laws and regulations were written by their lobbyists and put in place by equally corrupt politicians and due to this, no one is legally responsible. That is not sensationalism that is the facts.

Unfortunately, you are the one that tried to make claims way beyond your knowledge on this and that's why we're talking about corporate structure:

That one part of AIG has caused the WHOLE company problems. They don't have the money to pay on life insurance or any other policy. It's indefensible...

That betrays a profound lack of knowledge based on these silly CNN shock pieces. That's obviously you talking out of your ass, since you still haven't been able to substantiate it.

If you just want to hate AIG because it's big and has an arm that does CDOs, that's unsurprisingly unoriginal at this point. Go for it.

Lay off the flagrant fabrications though.

The true risk is that if it all fails, whether or not it is a small subsidiary that has caused it really doesn't matter if the whole thing collapses.

Just to make sure you understand... The quote above is a false statement. If every single subsidiary of AIG fails, all current policies will remain unaffected and continue paying out.

This isn't something that bears argument. It's not anyone's opinion. It's simply (though not so simple) the way the laws, corporate structure, and regulations dictate an AIG holding company failure plays out.

LOL...I understand. You have shown my point. The problem is the only buyer right now appears to be China and from what I understand that is not a great situation as they are looking for it to be sold to them at an extraordinary discount.



Wha ... ?

No, the AIG holding company is in horrible shape

I think I said this in my original post...but I didn't say AIG holding company....I said AIG

however they do have profitable, solvent subsidiaries...as well as functionally ultrabankrupt ones

As do most businesses with different parts that operate quasi independently.

The problem is the only buyer right now appears to be China and from what I understand that is not a great situation as they are looking for it to be sold to them at an extraordinary discount.

The Chinese...Asian people...Beijing, Hong Kong etc....