teomaxxx

you guys remember the bailout for 80 Billions? it went up week before into 122.8 bilion and now they are even asking for more...how can institution burn through 122 bil in a month?

thats what is called "throw good money after bad money". With all FED recent actions, there was/is going to be throwned around 3T of "good money after bad money" = money going into the hole to save wallstreet crooks, which doesnt bring anything good to whole economy.


from bloomberg:
AIG's Liddy Says $122.8 Billion `May Not Be Enough' (Update1)

By Hugh Son

Oct. 23 (Bloomberg) -- American International Group Inc., the insurer bailed out by the U.S., may need to borrow more than the $122.8 billion already offered by the government if capital markets don't improve, said Chief Executive Officer Edward Liddy.

AIG, which averted collapse last month with a Federal Reserve loan, is dependent on ``what happens to the capital markets,'' Liddy, 62, said late yesterday on PBS's ``The NewsHour With Jim Lehrer.'' AIG needed cash after credit downgrades forced the insurer to post more than $10 billion in collateral to clients who purchased guarantees on bonds that lost value.

``To the extent they continue to go down and we have to keep posting collateral, as it's called in the vernacular of the industry, it's possible it may not be enough,'' Liddy said.

Liddy, the former Allstate Corp. CEO appointed by the government to run AIG last month, is selling businesses including U.S. life insurance, plane leasing and consumer finance to repay the loan. The New York-based company had tapped $82.9 billion, two-thirds of its total Fed credit line, as of last week and new figures may be disclosed today.

``This emphasizes the uncertainty for anyone trying to put a number'' on AIG's cash needs, said Bill Bergman, an analyst at Morningstar Inc. in Chicago. The financial products unit responsible for most of the firm's losses ``is a big black hole.''

Liddy said in the interview that he still hopes to stay within the $122.8 billion ceiling and that U.S. Treasury efforts to spur lending and increase confidence in banks ``seem to be working.'' A spokesman for the New York Fed declined to comment. Brookly McLaughlin, spokeswoman for the Treasury, didn't immediately return a call seeking comment.

`Liquidity Drain'

``The money is to meet our cash needs while we work out the rest of our solution, it's not the total solution,'' said AIG spokesman Nicholas Ashooh. ``We still have to sell businesses and still need a permanent solution to the liquidity drain'' from securities lending and the fixed-income guarantees known as credit-default swaps.

AIG, which got an $85 billion credit line on Sept. 16 to stave off bankruptcy, was given access to an additional $37.8 billion on Oct. 8 to shore up its securities-lending program, which lost money on investments made using collateral from assets it loaned to third parties. AIG agreed to turn over an 80 percent stake in the firm to the U.S. in exchange for the first loan.

The insurer may seek a third source of cash by tapping a Fed program that buys commercial paper, a person familiar with the matter said last week. AIG will probably borrow less than $10 billion through the program, which is scheduled to start next week, the person said.

`Lost Our Way'

AIG sold protection on $441 billion of fixed-income investments, including $57.8 billion in securities tied to subprime mortgages. The swaps plunged in value as the assets they guaranteed declined, forcing $25 billion in writedowns over nine months and leading to three quarterly losses.

``We kind of lost our way, AIG did, and we got out of the basic insurance business that we know so well,'' Liddy said yesterday. ``Within the first two or three weeks of taking that loan, we were at the $69 billion level, so anyone who thinks we didn't need the Federal Reserve as a lifesaver simply doesn't understand the precarious nature of where we were.''

The government ``threw us a lifeline which we desperately needed so that the rest of the financial system wouldn't be contaminated,'' he said.

Liddy told employees on Sept. 18 that the original $85 billion loan was ``a really big number, I think that's enough.'' In an Oct. 3 conference call with analysts, he said that he didn't want to state the company would ``never'' need more.

Lessons Learned

``One of the lessons from the savings and loan crisis is that firms that were going under forestalled the recognition of how severe the problem was through accounting, and with the cooperation of regulators,'' Bergman said. ``I certainly hope that's not happening with AIG today.''

AIG's losses have led to the ousters of two CEOs, Martin Sullivan and Robert Willumstad, in the last five months. The executives were lambasted by lawmakers at an Oct. 7 hearing on why the government needed to intervene to save AIG.

The insurer agreed to freeze $19 million due to Sullivan and $600 million in compensation for other executives, New York Attorney General Andrew Cuomo said yesterday. Cuomo last week demanded that AIG, once the world's biggest insurer, stop ``extravagant'' expenditures and recover millions of dollars in unreasonable payments, or face legal action.

Bad Trip

AIG also agreed last week to immediately cancel all junkets and perks, according to a statement jointly issued by Cuomo and the company. The company has been castigated by officials since it hosted a $440,000 conference at a California resort last month after agreeing to the federal bailout.

The insurer will pay 8.5 percent annual interest plus the 3- month London interbank offered rate on money it draws from the two-year, $85 billion loan. Three-month Libor is 3.54 percent today, compared with 2.88 percent the day AIG agreed to the bailout.

AIG later said it would also be allowed to swap as much as $37.8 billion of its ``investment-grade, fixed income securities'' with the government for cash to address a liquidity squeeze caused by the insurer's securities-lending program.

``We have to behave in a much different way,'' Liddy said. ``Just as the American consumer is tightening their belt, we are tightening our belt.''

To contact the reporter on this story: Hugh Son in New York at [email protected]

StuartD

This is why the bail out could never work. They're not fixing anything by giving these guys money, they're just giving them more money to lose.

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Snake Doctor

Hey it's hard to meet your fiduciary obligations and get 400K worth of massages on a measly $123 billion. Give the guys a break. ;p

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Vendot

plus also what about health care insurance? and shrinks?

$123 billion was an odd number anyway. It should have been $400 billion or $680 billion or $712 billion or $942 billion or $1131 billion or $1183 billion

teomaxxx

so now, when its almost sure thing that 122 bilions isnt enough, here comes the interesting story:

Goldman big winner in government's revised bailout of AIG

"But even with the toned-down headline, it looks as if the AIG treatment is, again. all about special dealing on behalf of Goldman. Recall that Goldman CEO Lloyd Blankfein was the only Wall Street executive invited in to work with Paulson on the terms of the original rescue. These guys are completely shameless, and for good reason. There are no repercussions from this sort of cronyism, not even recrimination in the media."

here is the rest of the story with details:
http://www.nakedcapitalism.com/2008/...vernments.html

some should fired up Hank Paulson (ex-goldman ceo) and his friends put them into the prison.
they are looting US taxpayers in order to save their wallstreet friends

Peter Romero

If we put a toll booth on the border instead of guards then we could raise some revenue right quick. Then, the moment someone not from the USA complains... get truckin.

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dready

This whole bailout thing make me sick.

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farkedup

so we have the lower and middle classes sending all of their money to the upper class anybdy else feel like buying guns and storming DC?

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dav3

I hate greedy fucks.

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PornMD

Sad when you consider $122 BILLION is $122,000 x 1,000,000, aka giving practically life-changing money to a million people. Just sick.

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IllTestYourGirls

Yup uneducated migrant workers on welfare sending money back over the border is exactly what this country needs right now

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Kudles

God they are screwed

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teomaxxx

the biggest problem is that the show is runed by totally clueless people, who have no fucking idea or by crooks who even participated on creation of the whole mess (Geithner, Paulson before)
just guys prepare to paid $60 billion into the blackhole called AIG.


http://www.cnbc.com/id/29353282

AIG will ask the govt. for another bailout.
Without another U.S. bailout, AIG will file for bankruptcy next week.

AIG Seeks More US Funds As Record Loss Looms
By: David Faber, CNBC Anchor and Reporter | 23 Feb 2009 | 03:00 PM ET

American Insurance Group, the insurance giant that is 80-percent owned by the US government, is in discussions with the government to secure additional funds so it can keep operating after next Monday, when it will report the largest loss in U.S. corporate history, CNBC has learned.

Sources close to the company said the loss will be near $60 billion due to writedowns on a variety of assets including commercial real estate.

That massive loss is likely to spur downgrades in its insurance and credit ratings that will force AIG to raise collateral that it doesn't have.

In addition, if AIG's book value falls below a certain level, as it seems certain to do, it will trigger default in certain of its debt instruments, say people familiar with the situation.

All of this adds up to a huge headache for the Federal Reserve and Treasury, which have already provided over $150 billion of assistance to AIG.

Talks between the government and AIG are focussed on how the company can swap some of the debt held by the government for equity in AIG. The problem is that the government's ownership stake cannot exceed its current 79.9 percent, leaving officials to try and find a creative way to transfer value to the US in exchange for AIG reducing its debt so that it can then borrow more from the government to meet its collateral calls.

AIG has borrowed roughly $40 billion from a $60 billion credit facility provided it by the Federal Reserve Bank of New York. if it can find a way to pay that down by swapping equity, it hopes to take it back up to a level that will allow it to meet its collateral and capital calls.

AIG's board is scheduled to meet this Sunday night in hopes of hammering out an agreement with the government. But in case it can't, AIG's lawyers at Weill Gotschal are preparing for the possibility of bankruptcy.

That seems unlikely, but last November, the government took control of many of AIG's credit default swaps and so a bankruptcy of the holding company might not pose the systemic risk it once did.

AIG officials have not offered comment. Officials at the Federal Reserve Bank of New York have not returned calls.

$5 submissions

They are set to announce the largest loss in US corporate history--$60B

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smax

moral hazard

pornguy

They should stick to insuring real property and not bonds.

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mynameisjim

I love how all these so-called capitalist purists on CNBC and other outlets bitch about the mortgage bailout that helps people facing foreclosure because it rewards the "losers", but they don't seem to have any problem begging for money when they ran their own companies into the ground.

I don't think the average person really realizes how shallow these big business types are.

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Pleasurepays

"all these capitalists" ?

a CEO of a company like this has to appease the board just as a politician has to appease his constituents. its his job.

mynameisjim

I didn't say capitalists, I said so called capitalist purists. I was talking about they scream socialism and moral hazard when individuals get a bailout but have no problems begging for a bailout themselves.

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D Ghost

thats fuckin nuts

Pleasurepays

"they"?

you mean the CEO of AIG is screaming out socialism while begging for money?

who's "they"

you sound like Obama on the campaign trail "they said...." and there never was a "they". brilliant but a bit dishonest.

vod

Let AIG Fail

Let the banks fail


short the Banks and Credit cards... BOA - COF - C - WFC - short these STOCKS

Gov will take over for a short period and fuck it up more, but let the people run the banks into the gound

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mynameisjim

I mentioned it in the first post. By "they" I meant the financial media outlets like CNBC and the Wall Street Journal, etc.

They all demanded a bailout for banks saying that it was needed to prevent a collapse/depression and just recently they are all attacking the bailout for struggling homeowners since they claim it rewards the losers who bought homes they couldn't afford.

I'm saying a lot of these people want to have their cake and eat it too.

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TheSenator

If you short, you will not get paid.


Why?

Most of the credit default swaps are owned by AIG. If they fail no one gets paid..Its a double edge sword.

Wall Street is about to collapse and the US government is going to take over.

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pocketkangaroo

Many of the people on the financial networks love to talk about horrible socialism and how welfare handouts destroy our economy. How government should have no involvement in business. But when a bank, investment firm, or insurance company is on the brink of failure, they are crying on TV for the government to bail them out. Just about every person on these networks tore the government apart for not saving Lehman Brothers.

If you need names, try Bill O'Reilly, Rick Santelli, Larry Kudlow, Charles Payne, Jim Cramer, and Dylan Ratigan. Those are just a few names I've seen on TV who were supporters of keeping government out of business until they started losing money. Now these networks do have a few guys who stood by their convictions throughout the mess, but they seemed to get fewer and farther between.

pocketkangaroo

As easy as it sounds to say "let them fail", I don't think people really understand what that means. AIG sold credit default swaps to basically every major financial institution in this country. If that happened, it literally would destroy our entire economic system. Banks would literally go insolvent overnight. You would lose most of your credit lines. You'd see unemployment in the high teens.

crockett

couldn't they just pay off every loan in the country for that much..

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TheSenator

Fix the credit default swaps, fixes the economy.

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teomaxxx

so what is going on right now, that taxpayer aka AIG is paying CDS, while there isnt enough money to pay all CDS at all in the longer timeframe, just look on their size.

a lot of entities just speculate with CDS and dont own any bonds they would need insurance for - and the taxpayer money goes there too.

sooner or later, it will have to end. either US goverment will choose some kind of way how to sort this mess out or they can try to save every "too big to fail" institution and fail later with them. those idiots cant even make some estabilished CDS trading system and make some rules, like you cant issue CDS when you dont have a money to pay it off (like AIG was doing before).
the lack of sound responsive actions and crooks running the show make all sure to have a repeat of GD2.

teomaxxx

here is some great proposal from a one of the most knowledegble guys about current crises (I made several 100% percents on some of his short picks, when every idiot were shouting "buy, buy, buy" or goverment officals without 0 clue were telling us, that this is a bottom):
http://www.riskcenter.com/story.php?id=17904

the way out of current crises depends (in the half) on the solution how to solve CDS protection bets = they are the biggest problem which can cause currency crises all over the world, if goverments will try to backstop the players. we can be lucky to have only economical crises, if they stop this monster at the begining.

Doctor Dre

They are preventing the economic system to meltdown... they aren't fixing anything.

To fix anything permantly they would have to change the whole way the money system works.

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teomaxxx

as one of the greatest Austrian Economists wrote:

"There is no means of avoiding the final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as the result of a voluntary abandonment of further credit expansion, or later as a final and total catastrophe of the currency system involved." Ludwig von Mises

it looks like that US and EU goverments like to prefer a second way. good luck to them and us.

Rochard

What the fuck does AIG do? Life insurance? Investments? If they went under in the morning, how would it affect me?

Oh, it wouldn't.

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