Fed Grants AIG $37.8 Billion Loan

[ElNono]

LINK (http://www.todaysthv.com/news/natInt/story.aspx?storyid=73749&catid=288)

Fed Grants AIG $37.8 Billion Loan

The Federal Reserve has agreed to provide insurance giant American International Group with a loan of up to 37.8 billion dollars, on top of one made to the troubled company last month.

Under the new program, the Federal Reserve Bank of New York will borrow up to 37.8 billion in investment-grade, fixed income securities from AIG in return for cash collateral. These securities were previously lent by AIG's insurance company subsidiaries to third parties.

Last month, the Fed provided an 85 billion-dollar loan to the company, which was on the brink of bankruptcy.

:bang

[Shastafarian]

Can we take those executives out and tar and feather them like the good ole days?

[boutons_]

The Repugs and capitalists pillage and burn the US govt in their last days in office.

[Wild Cobra]

Don't you just love the elitists rewarding their fellow elitists for failure?

[clambake]

Don't you just love the elitists rewarding their fellow elitists for failure?

did you repay the money you took when you were on welfare?

[Anti.Hero]

The Repugs and capitalists pillage and burn the US govt in their last days in office.

Don't worry little buddy. Obama will save us.

Just a couple more months. Don't you give up Boutons.

[Wild Cobra]

Don't worry little buddy. Obama will save us.

Just a couple more months. Don't you give up Boutons.

Yes, and he will do it by increasing the tax credits for everyone lowering taxes, and increasing redistribution of wealth from tax payers to non-tax payers. He will also increase social spending by about $800 billion annually. The extra money will come from raising taxes on those making $250,000 or more.

Yep, that will do it, right?

Wrong...

$250,000 or more on income taxes. The real wealthy don't get their money in a manner to be counted as income taxes. About 75% of those who fall under Obama's increasing tax bracket are small business owners, who will probably have to lay off workers, and possible go bankrupt themselves because they may not be able to maintain a profit.

Yep, that's a world I want to live in... Not...

[Ryvin1]

LINK (http://www.todaysthv.com/news/natInt/story.aspx?storyid=73749&catid=288)

Fed Grants AIG $37.8 Billion Loan

The Federal Reserve has agreed to provide insurance giant American International Group with a loan of up to 37.8 billion dollars, on top of one made to the troubled company last month.

Under the new program, the Federal Reserve Bank of New York will borrow up to 37.8 billion in investment-grade, fixed income securities from AIG in return for cash collateral. These securities were previously lent by AIG's insurance company subsidiaries to third parties.

Last month, the Fed provided an 85 billion-dollar loan to the company, which was on the brink of bankruptcy.

:bang


This is after the 440k party at the resort in San Deigo for execs.. sigh its like a crime

[fyatuk]

Didn't the government get an 80% stake in AIG? Isn't this like lending themselves money, then? Still stupid. Unless of course the fixed income securities will provide more income than the loan amount, then it's not bad.

[spurster]

All right! More vacation! Let's party!

[smeagol]

So letting AIG fall will only punish their top executives. Nobody else will suffer.

Mmmm . . . key . . .

[SpursFanFirst]

All right! More vacation! Let's party!

:toast Sweeeeeet! I'm first in line at the spa!

[Wild Cobra]

This is after the 440k party at the resort in San Deigo for execs.. sigh its like a crime
Well, I heard yesterday that this was the prize for people that met certain sales goals. It at least wasn't for the top executives, but for workers. It was also planned far before this crisis was apparent. I still think it should have been cancelled, but it at least isn't as bad as it first appears.


So letting AIG fall will only punish their top executives. Nobody else will suffer.

Mmmm . . . key . . .
The point is that the top executives will have a hard time getting work, but the workers will still be able to find other jobs. Ye cannot prop up every business that makes bad mistakes.

[LaMarcus Bryant]

Did anyone see the how AIG just hosted a 2 million dollar party at a bad ass hotel, 150,000 on food, and over 350,000 in comped amenities from the hotel? All taxpayer money. And they defended it by saying, "The event was planned months in advance".

[TDMVPDPOY]

Did anyone see the how AIG just hosted a 2 million dollar party at a bad ass hotel, 150,000 on food, and over 350,000 in comped amenities from the hotel? All taxpayer money. And they defended it by saying, "The event was planned months in advance".

http://www.naturalnews.com/images/AIG-invoice.gif

[boutons_]

http://graphics8.nytimes.com/images/misc/logoprinter.gif (http://www.nytimes.com/)
http://graphics8.nytimes.com/ads/spacer.gifhttp://graphics8.nytimes.com/ads/fox/printerfriendly.gifhttp://graphics8.nytimes.com/adx/images/ADS/18/32/ad.183235/SLOB_banner_88x31_3.gif (http://www.nytimes.com/adx/bin/adx_click.html?type=goto&page=www.nytimes.com/printer-friendly&pos=Position1&sn2=336c557e/4f3dd5d2&sn1=41922fbf/41f8f9d8&camp=foxsearch2008_emailtools_810908e_nyt5&ad=SLOB_88x31_1017_PrFr&goto=http://www.foxsearchlight.com/thesecretlifeofbees/)

October 10, 2008
Breakingviews.com

When $85 Billion Just Isn’t Enough

By LAUREN SILVA and DWIGHT CASS

If it were one of its own customers, American International Group (http://topics.nytimes.com/top/news/business/companies/american_international_group/index.html?inline=nyt-org) would struggle to get a life insurance policy. The company took an $85 billion rescue loan from the Federal Reserve (http://topics.nytimes.com/top/reference/timestopics/organizations/f/federal_reserve_system/index.html?inline=nyt-org). It promised to sell pieces of itself to repay the loan, and gave the Fed the right to an 80 percent ownership stake. Now, A.I.G. has gone back to the Fed for $38 billion more. The move highlights how little may be left for shareholders.

Consider A.I.G.’s asset sales. The top lots on the block will probably be its overseas life and retirement businesses. If the company could sell all of these for, say, 10 times 2008 estimated earnings, it could bring in some $50 billion. The company’s United States life and retirement business might fetch about $20 billion if sold at eight times earnings, which would be closer to the valuation of a rival, MetLife, today.

Then there is A.I.G.’s aircraft leasing business, now on the group’s books at $7.5 billion. A.I.G. might collect another $10 billion selling things like a stake in the fund manager Blackstone and real estate like the Stowe Mountain Resort in Vermont. Add it all up and A.I.G. would have $87.5 billion on hand.

As of last Wednesday, A.I.G. had drawn down $61 billion from the Fed. Going back for more on Wednesday suggests it is close to exhausting the full $85 billion that the Fed originally offered. With the additional $38 million from the Fed, then, A.I.G. will owe the Fed up to $123 billion.

After selling its other businesses and repaying that amount to the Fed, A.I.G. would still have its property and casualty arm. At nine times earnings — generous, considering that Travelers trades at six times — the business would be worth around $37 billion. Net that against the remaining Fed debt, and shareholders might have $1.5 billion of value left over, if they don’t have to repay pre-existing lenders. That’s less than a quarter of the current market capitalization — and the Fed’s hugely dilutive shareholding will leave much less for other shareholders.

Of course, A.I.G. would also still own the financial assets that have caused so much trouble. They have been written down heavily, but markets are still deteriorating. An upturn or the government’s rescue program could increase their worth. But right now there isn’t much value for shareholders to hang their hopes on.

A Day of Reckoning

Wall Street and its regulators are gnawing their fingernails. Financial firms are about to learn how much they stand to gain — or lose — on derivatives linked to Lehman Brothers (http://topics.nytimes.com/top/news/business/companies/lehman_brothers_holdings_inc/index.html?inline=nyt-org)’ credit.

Banks, hedge funds and others use the credit-default swap (http://topics.nytimes.com/top/reference/timestopics/subjects/c/credit_default_swaps/index.html?inline=nyt-classifier) market to sell and buy protection against borrowers’ defaults. Protection sellers agree to pay buyers the difference between the face value of the debt, usually 100 cents on the dollar, and what investors expect to recover through the bankruptcy process.

Lehman, which filed for bankruptcy last month, has about $113 billion of bonds outstanding, according to Reuters Knowledge. It’s impossible to know how much protection has been written on that debt, because credit derivatives are privately negotiated and not all buyers of protection hold the underlying debt.

It’s likely that the amount of C.D.S. linked to Lehman is at least several times the size of its borrowings.

A representative Lehman bond that fetched 95 cents on the dollar in late August is now trading at about 11 cents. Firms that sold credit protection on that debt should expect similarly big losses.

Bond prices aren’t an exact barometer of C.D.S. losses, however, in part because of the different characteristics and holding costs of derivatives and bonds. So, after a default, derivatives buyers and sellers use an auction-based system to come to a consensus forecast on potential recovery. Sellers subtract that from 100, multiply the result by the amount of C.D.S. protection they’ve sold and that’s what they owe protection buyers.

The Lehman C.D.S. auction process is set for today. Large amounts of cash are likely to change hands as a result. But there’s a winner for every loser in this market, so the net effect on the financial system should be minimal. Except that no one knows if all the losers will be able to pay — and that’s what has Wall Street worried.

LAUREN SILVA and DWIGHT CASS

For more independent financial commentary and analysis, visit www.breakingviews.com (http://www.breakingviews.com).

===========

So, will AIG really sell its assets, enough assets, to pay back a $123B loan? I'd be surprised.

[boutons_]

When $123B Isn't Enough

=============

A.I.G. May Need Even More Money, Its Chief Says

American International Group may need even more money than the $122.8 billion that the federal government is loaning the giant insurance company to avoid collapse, according to its chairman and chief executive, Edward M. Liddy.


Mr. Liddy said A.I.G.’s cash needs were tied to the fortunes of the capital markets. “To the extent they continue to go down and we have to keep posting collateral, as it’s called, the vernacular in the industry, it’s possible it may not be enough,” he said.


http://dealbook.blogs.nytimes.com/2008/10/23/aig-may-need-even-more-money-its-chief-says/

[LnGrrrR]

AIG MAY NEED MORE MONEY, Chief says

AIG has 3 or 4 lavish parties planned in the next few months, said its Chief, requiring billions of dollars from normal taxpayers. The Chief lamented this need for even more bailouts, but explained it by saying, "Look, these parties were months in advance, and we had no clue our finances were so shitty. Our bad. But we can't call this thing off; it's not refundable. Besides, what about the poor caterers? The busboys? The chefs? Somebody needs to support them in these terrible economic times, that, you know, we helped create."

Before he left, he also added, "Oh and if there's some cheesecake left, you guys are more than welcome to it after we leave."

[Twisted_Dawg]

AIG MAY NEED MORE MONEY, Chief says

AIG has 3 or 4 lavish parties planned in the next few months, said its Chief, requiring billions of dollars from normal taxpayers. The Chief lamented this need for even more bailouts, but explained it by saying, "Look, these parties were months in advance, and we had no clue our finances were so shitty. Our bad. But we can't call this thing off; it's not refundable. Besides, what about the poor caterers? The busboys? The chefs? Somebody needs to support them in these terrible economic times, that, you know, we helped create."

Before he left, he also added, "Oh and if there's some cheesecake left, you guys are more than welcome to it after we leave."


Didn't a haughty bitch in France eons ago say, "Let them (peasants) eat cake"?

[boutons_]

Paulsen's Goldman was owed $5B by AIG. He saved AIG, nice benefit for Goldman.

Then I read that another AIG obligation to Goldman was $20B.

I'm sure Goldman will have a reward for Paulsen when his Treasury heist is over.

[boutons_]

AIG's Failure Hits Urbanites Where They Live

Last Friday shaped up to be a pretty bad day for my friend Ryan Avent, who blogs about sensible urban planning and transit issues at The Bellows. Not only did news break that a recently demolished property was going to be made into the city's most unneeded parking lot (http://www.ryanavent.com/blog/?p=1541) - a sort of direct-from-hell version of terraforming in the downtown core of Washington, DC - but he learned that AIG's failure was going to have impact on mass transit systems in cities all over the country (http://www.ryanavent.com/blog/?p=1540):

Metro and 30 other transit agencies across the country may have to pay billions of dollars to large banks as years-old financing deals unravel, potentially hurting service for millions of bus and train riders, transit officials said yesterday.
The problems are an unexpected consequence of the credit crisis, triggered indirectly by the collapse of American International Group, the insurance giant that U.S. taxpayers recently rescued from bankruptcy, officials said.
AIG had guaranteed deals between transit agencies and banks under which the banks made upfront payments that the agencies agreed to repay over time. But AIG's financial problems have invalidated the company's guarantees, putting the deals in technical default and allowing the banks to ask for all their money at once.
You didn't think this could cost you now, did you? As it turns out, there's already some Congressional movement afoot (http://yglesias.thinkprogress.org/archives/2008/10/doing_something.php) to quickly slap a band-aid on this problem. Nevertheless, the question Ryan asks is still worth asking, repeatedly: "One might ask just what the hell was the point of giving AIG government credit worth $122 billion (and counting) if it wasn't going to prevent the deals the firm guaranteed from falling apart."


=======


The hellish point was for Paulsen to protect the $Bs owed by AIG to his colleagues at Goldman, who will of course take very good care of Paulsen later.


Also note that the banks getting injections of cash are NOT using the cash to create credit and get the economy going, but to fill up the holes in their balance sheets.


Paulsen is encouraging the non-credit use of the taxpayers $Bs by encouraging the injected banks to take over weaker banks. Consolidation of course reduces competition, which is every businessman's wet dream, become a monopoly like Bill Gates.



Bottom line: the capitalists are robbing taxpayers in broad daylight and Paulsen has been lying all along.

[boutons_]

http://media.washingtonpost.com/wp-srv/ssi/globalnav/wpdotcom_190x30.gif (http://www.washingtonpost.com/?nav=pf) http://media3.washingtonpost.com/wp-srv/hp/img/ad_label_leftjust.gif


Effectiveness of AIG's $143 Billion Rescue Questioned

By Carol D. Leonnig
Washington Post Staff Writer
Monday, November 3, 2008; A18

A number of financial experts now fear that the federal government's $143 billion attempt to rescue troubled insurance giant American International Group (http://www.washingtonpost.com/ac2/related/topic/American+International+Group+Inc.?tid=informline) may not work, and some argue that company shareholders and taxpayers would have been better served by a bankruptcy filing.

The Treasury Department (http://www.washingtonpost.com/ac2/related/topic/U.S.+Department+of+the+Treasury?tid=informline) leapt to keep AIG from going bankrupt on Sept. 16, and in the past seven weeks, AIG has drawn down $90 billion in federal bailout loans. But some key AIG players argue that bankruptcy would have offered more structure and greater protections during a time of intense market volatility.

AIG declined to comment on the matter.

Echoing some other experts, Ann Rutledge, a credit derivatives expert and founding principal of R&R Consulting, said she is not sure how badly the financial system would have been rocked if the government had let AIG file for bankruptcy protection. But she fears that the government is papering over the problem with a quick fix that was not well planned.

( Sorta like FEMA and hurricanes? :lol or Rummy and Iraq? :lol )

"What we see now are a lot of games by the government to keep these institutions going with a lot of cash," she said. "This is to fill holes in companies' balance sheets, and they're trying to hold at bay the charges that our financial system is insolvent."

( and the credit freeze-up is thawing? :lol )

The deal that the Treasury and the Federal Reserve Bank of New York (http://www.washingtonpost.com/ac2/related/topic/Federal+Reserve+Bank+of+New+York?tid=informline) pressed upon AIG was intended to stop any domino effect of financial institutions falling because of their business ties to AIG. The rescue allowed AIG to provide cash to huge banks and other players who had invested in rapidly souring mortgages insured by the company.

Early this year, investors had begun privately demanding that AIG pay off its billion-dollar guarantees. But in mid-September, when the demands for cash reached a public crescendo, AIG had to admit that it didn't have enough cash on hand to meet the obligations.

In the first weeks of its federal rescue, AIG has used the loan money to post collateral demanded by these firms, sources close to those deals say.

( "These firms" includes Paulsen's Goldman, what a coincidence! :lol )

"No one else benefits," former AIG chief executive and major shareholder Maurice R. "Hank" Greenberg wrote to AIG's current chief executive on Thursday. "Unless there is immediate change to the structure of the Federal loan, the American taxpayer will likely suffer a significant financial loss."

Another concern is that in this depressed market, AIG, and the taxpayers that now own 80 percent of the company, will lose coming and going.

The company may be forced to borrow additional federal funds for rising payouts to counterparties. Neither the government nor AIG is releasing information about the specific amounts paid to individual firms, but numerous credit experts say that the value of those mortgage assets is probably declining every week. That means AIG has to pay a higher price as part of its guarantees.

The company also may be forced to sell many more assets at low, fire-sale prices. As part of its loan deal, AIG was to sell some assets -- valued at $1 trillion before the crisis -- to raise cash to pay off the loan.

AIG's Financial Products division is the primary villain in the company's free-fall. It made tens of billions of disastrously bad bets on mortgage investments but may not have carefully hedged those bets or properly estimated its risk. The company's rapid burn of $90 billion also suggests that it grossly undervalued its obligations to counterparties in a worst-case scenario.

In February, internal notes show, board members discussed a growing dispute between AIG Financial Products and Goldman Sachs (http://www.washingtonpost.com/ac2/related/topic/Goldman+Sachs+Group+Inc.?tid=informline)management to the dispute, not AIG Financial Products, and that the division was not properly considering the market in its pricing. about the value of those assets when Goldman called for AIG to post collateral. AIG's chief financial officer warned of "Goldman's acknowledged desire to obtain as much cash as possible."

But AIG's external accountants warned that it was they who alerted
Rutledge warns that because there has been no public disclosure of AIG's payments to counterparties, it is impossible to know whether the pricing it is using now is proper.

The Federal Reserve (http://www.washingtonpost.com/ac2/related/topic/U.S.+Federal+Reserve?tid=informline) and its advisers have acknowledged privately that things are not going according to plan. :lol :lol

( BS Goldman is protected, so far, from AIG going bankrupt )

As AIG has rapidly eaten through the loan money, the Fed has twice expanded its original $85 billion bailout -- which itself was the largest government bailout of a private company in U.S. history. Earlier last month, the Fed reluctantly gave AIG $38 billion more in credit for securities lending to try to keep the firm from drawing down its first Fed loan too quickly.

Then on Thursday, the Fed agreed to let AIG borrow $20 billion from a larger commercial paper bailout fund it had set up days earlier for all institutions that lend money to each other.

If the company had filed for Chapter 11 bankruptcy protection, AIG could have frozen the crippling collateral calls, and shareholders would have had a chance at recovering some value from the company's 80 percent drop in stock price from earlier this year, said Lee Wolosky, a lawyer for AIG's largest shareholder, Starr International.

"AIG is nothing more than a pass-through being charged 14 percent interest," Wolosky said. "Company assets are eroding on a daily basis; asset sales have not begun and can only be at fire-sale prices in the current market. "

But David Schiff of Schiff's Insurance Observer said he could not see
how bankruptcy would have been a better solution.

"The point isn't to save AIG; it's to save the U.S. financial system. I think they were afraid to find out who else goes under if you let AIG fail," he said. "But right now, no one knows if this is going to work."

========

So conservatives and Repugs, tell how wonderful your self-serving ideologies are going?

"All govt is bad" so the Repugs prove it by willfully destroying govt

"All taxes are bad" so the Repugs take $Ts of tax dollars (from the bottom 95%, of course) and burn them in the sands of Iraq and rob the Treasury to give to their financial cronies.

"All regulation is bad" so the Repugs annul and fail to enforce regulation so a "free market" reigns to enrich the corps and capitalists, which taxpayers lose $Ts in the retirement and pension savings.

Conservatives and Repugs are now proven to be assholes and their philosophy to be pure, self-serving bullshit.

VOTE McSame for more of the SAME. :lol


http://pix01.revsci.net/J05531/a3/0/0/0/0/0/0/0/0/0/noscript.gif