AIG Has Used Billions From Fed But Hasn't Said For What

AIG Has Used Billions From Fed But Hasn't Said For What

www.iht.com

The American International Group is rapidly running through $123 billion in emergency lending provided by the Federal Reserve, raising questions about how a company claiming to be solvent in September could have developed such a big hole by October. Some analysts say at least part of the shortfall must have been there all along, hidden by irregular accounting.

(visit the link for the full news article)

So basically this insurer is having to shore up billions to cover its soured assets and plug holes it never said it has. They sidelined accountants that were trying to fix the problem.

More importantly, there's this little snippet:

These accounting questions are of interest not only because U.S. taxpayers are footing the bill at AIG but also because the post-mortems may point to a fundamental flaw in the Fed bailout: the money is buoying an insurer — and its trading partners — whose cash needs could easily exceed the existing government backstop if the housing sector continues to deteriorate.

and this:

of perhaps greatest interest to watchdogs — tens of billions of dollars to post collateral with other financial institutions, as required by AIG's many derivatives contracts.

Here's more evidence that the losses that these institutions are facing dwarf what's been published, and that the bailout money might only be used to cover losses and not free up the credit market. Let's also not forget about how the article mentions AIG was warned internally and externally about the impending crisis!

What do you guys think of all this? Apparently AIG has had alarms going off all over the place for over a year now, and its management has actively taken steps to conceal the truth from everyone around it. They may not just be sitting on a bomb, they may be sitting on a nuke.

Edit: I thought this was a fitting end to the article:

"We may be better off in the long run letting the losses be realized and letting the people who took the risk bear the loss," said Bill Bergman, senior equity analyst at the market research company Morningstar.

www.iht.com
(visit the link for the full news article)

[edit on 30-10-2008 by Avenginggecko]

reply to post by Avenginggecko


Great find!

The key legislators and principals within the board of AIG knew for quite a while that they were in trouble. When confronted directly, they lied.

They lied to congress and no one has taken them to task for it.

Paulson will protect them. As Tzar, that is his purpose. To protect the profiteering leadership, and provide some modicum of cover for incompetent auditors, and other 'willing' administrators who kept executing the destructive practices, despite knowing better.

I heard on the radio the other night there is an estimated $60,000,000,000 (that's billion) in executive bonuses due to be paid on Wall Street before years end, makes one wonder? And once they get the cash, is there anything stopping them from leaving their positions in droves?

I think we should appoint a civilian oversight committee, because allowing these people to police themselves is criminal.

lol, and there were people who actually thought opening federal reserve funds to corporations would be a good idea...

What did they expect would happen?

Corporations are in the business of making money... if you open the bank doors to them and say "take only what you need..." they suddenly feel they need everything they can pull out.


Here's an experiment... find a poor person, give them your credit card. Tell them to take only what they need, and you'll foot the bill.
... that card will be maxed out in a day, guaranteed.

This is no different... except for the fact that it's done on a national scale.

Well, we already know where 440,000 of it went.

canadianmaple.wordpress.com...

American International Group Inc. spent US$440,000 at the St. Regis resort in Monarch Beach a week after the bailout, according to the Committee on Oversight and Government Reform in the U.S. I guess they figured since the American people were footing the bill, it was no big deal. Like a free vacation. According to the National Post:

reply to post by Maxmars


It's ridiculous and I'm sure no one will be taken to task for it, or they will single out one executive from a mid/upper level area that delt with securities and feed them to the dogs.

I personally had no idea that PriceWaterhouseCooper, AIG's auditor, had been threatening them with a credit downgrade for almost a year because PWC wasn't fooled by their financial trickery and saw that the house of cards these default swaps were built on were about to collapse. They had sooo long to do something but did nothing but sit on their hands??


reply to post by TheRooster


Well, theoretically, PWC was the civilian oversight committee. They saw the "material weakness" in the swaps and started to threaten AIG with a credit downgrade if they didn't fix the flaw and become more transparent. AIG did nothing until PWC actually made good on its promise and downgraded their credit rating. That's the only thing that caused AIG to actually come clean.

I'm not quite as up on insurance companies as I am banks and investment banks, but shortly after they got our money all hell broke loose. I'm willng to bet that they ended up having to pay out on some CDS that they insured, so it probably went poof!

It just dawned on me . . . our entire economic system is based purely on bullcrap.

Our elected officials actually believe their own bullcrap mantra that they're truly representing the people who were stupid enough to vote for them, and in the same vein actually believe that general public is further too stupid to see the true nature of what's being done to them with their own tax dollars.

The CEOs (some of which now inhabit the most powerful positions in the bureacratic puppet mastery) of these financial institutions deluded themselves into believing that the system upon which they'd built their empires was sound simply because they had the power and wealth, and political support behind them, and were further delusional in that they believed nobody would ever see through their thinly veiled scam provided everyone in positions of authority kept their mouths shut and continued to breed the fallacy exponentially to give the impression of perpetual growth. These CEOs ensure that the wealth flows to the appropriate channels to grease the assurance of the election of 'friendly' representation.

The senior managers of these lending institutions were lied to and bribed through 'bonus structures' by the executives of these organizations and given a false sense of security that this was not an elaborate Ponzi scheme to defraud the general public, and if it was they were in positions high enough that they were impune if the scheme was ever 'found out'.

Many of the consumers who now face economic ruin deluded themselves and their lenders into believing they could actually service the debt into which they'd entered.

Many of those working at the minion level in financial institutions deluted themselves and their bosses into believing these folks could actually service the debt into which they'd entered.

We've got a whole system based purely and simply on bullcrap . . . big fluffy piles of bullcrap and the PTB are further delusional in that they believe their spew that there is a way out of this and all we have to do is 'trust' them.

What a heaping load of what serves as the foundation of our entire system . . .

bullcrap.

Well I'm fed up!, I pulled all my money I can out of the banking system, if half the people did this it would expose the fraud of the entire system , that they don't have this money that say they have in the first place.. Banks don't have enough cash to even cover 1/10 the peoples checking accounts..

I'm for puling the table cloth out from under these crooks.. and I have.

Rah rah rah to the American free market that doesn't exist for the wealthy or giant corporations.

So is anyone still voting for the long term congress members who are running for reelection on the 4th.

Remember this bailout was important to save the economy, the economy of executives who will not stand to not receive giant bonuses despite poor performance and most likely criminal activities.

I am sure my senator here in Texas will get re-elected by the majority here because after all we cannot allow any attempt for a change of the good old system despite these voters not realizing it is gone and many are next on the 'going down the tubes' list.

Originally posted by jefwane
I'm not quite as up on insurance companies as I am banks and investment banks, but shortly after they got our money all hell broke loose. I'm willng to bet that they ended up having to pay out on some CDS that they insured, so it probably went poof!

From what I got from the article, some analysts think that the money is being funneled into the required reserve for some contracts, because AIG knows that the situation is going to deteriorate so it's trying its hardest to meet its basic requirements before everything hits the fan.

Edit to add: Does anyone think this could tie in to the artificial disaster that Biden talked to test Obama if he is elected? I think he said something to the effect of, "We'll have a generated crisis within 6 months if Obama's elected" (paraphrase)

[edit on 30-10-2008 by Avenginggecko]

Originally posted by Avenginggecko
Edit to add: Does anyone think this could tie in to the artificial disaster that Biden talked to test Obama if he is elected? I think he said something to the effect of, "We'll have a generated crisis within 6 months if Obama's elected" (paraphrase)

I would not be surprised. It is not designed by the business execs as they are only in this for the money grab despite their poor performance are just grabbing what is there.

I suspect someone has waited for this situation and has a plan ready. What their benefit is only time will tell.

reply to post by GoalPoster


"Welcome to the real world Neo."

In fact, it is true that had PWC not pressured AIG they would have been able to conceal their mismanagement a short while longer (enabling them to screw even MORE people.)

However, PWC's behavior was just as questionable. They had many opportunities to 'blow the whistle' on deals like this AND OTHERS, but they remained silent because, THEY ARE ALL CONSPIRATORS IN THE SAME GAME.

We live in a world where it is unacceptable for anyone to publicly disclose the 'nature' of fractional reserve lending, and the fiat currency that our sleazy monetary policy conceals from the tax-payers, who are subject to a mafia IRS. If you are a public figure, the minute you go there..., you're somehow silenced and 'erased' from public memory (RIP Aaron Russo).

Originally posted by Maxmars
reply to post by GoalPoster

 

"Welcome to the real world Neo."

In fact, it is true that had PWC not pressured AIG they would have been able to conceal their mismanagement a short while longer (enabling them to screw even MORE people.)

However, PWC's behavior was just as questionable. They had many opportunities to 'blow the whistle' on deals like this AND OTHERS, but they remained silent because, THEY ARE ALL CONSPIRATORS IN THE SAME GAME.

We live in a world where it is unacceptable for anyone to publicly disclose the 'nature' of fractional reserve lending, and the fiat currency that our sleazy monetary policy conceals from the tax-payers, who are subject to a mafia IRS. If you are a public figure, the minute you go there..., you're somehow silenced and 'erased' from public memory (RIP Aaron Russo).

Starred bubba because I agree with you 100 percent (which in our fractional system actually means that I've agreed with you 269687 percent, with anything over 100 percent being supported by a whole whack of posters who do not yet know I've usurped their percentage support to further my own position!!!!!!)