Skip to comments.A Question for A.I.G.: Where Did the Cash Go?
Posted on 10/30/2008 7:17:43 AM PDT by marshmallow
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.
You dont just suddenly lose $120 billion overnight, said Donn Vickrey of Gradient Analytics, an independent securities research firm in Scottsdale, Ariz.
Mr. Vickrey says he believes A.I.G. must have already accumulated tens of billions of dollars worth of losses by mid-September, when it came close to collapse and received an $85 billion emergency line of credit by the Fed. That loan was later supplemented by a $38 billion lending facility.
But losses on that scale do not show up in the companys financial filings. Instead, A.I.G. replenished its capital by issuing $20 billion in stock and debt in May and reassured investors that it had an ample cushion. It also said that it was making its accounting more precise.
Mr. Vickery and other analysts are examining the companys disclosures for clues that the cushion was threadbare and that company officials knew they had major losses months before the bailout.
Tantalizing support for this argument comes from what appears to have been a behind-the-scenes clash at the company over how to value some of its derivatives contracts. An accountant brought in by the company because of an earlier scandal was pushed to the sidelines on this issue, and the companys outside auditor, PricewaterhouseCoopers, warned of a material weakness months before the government bailout.
(Excerpt) Read more at nytimes.com ...
Then give 'em some more. We've got plenty. We've got $700 billion we can't figure what to do with. Despite early panic and Paulson's admonition that "we have to get this bill passed by Friday" as legislators huddled over the weekend and suggestions that our banking system was surviving on an hour to hour basis, we now have money lying around and are trying to decide who gets it. Insurance companies, automakers, provincial banks have all been mentioned.
What a fiasco.
I wonder how much of it went to the politicians who passed the bailout in the first place? Think we’ll ever know?
This is scary. Trust in our accounting the basis of the US market. Hanky panky at this scale will put us into a Japan style forever-recession.
Massive government bailout of failing company turns into a money pit where huge quantities of taxpayer money dissapear into a black hole never to be seen again.
Wow, who would have thought that would happen?
I have a suggestion for the next bailout: Take $1 Trillion in cash, put it in a pile, pour gasoline over it, and light it on fire. It will be cheaper and more effective than the other plans being floated around the pigsty washington.
Cook the books?
Hey, they used Fannie and Freddie Magic Accounting.
Worked out well didn’t it!
AIG gives payoffs to Democrats in Congress, buy them whores,
gives them trips — and now needs more money.
Surprise. Surprise. NOT.
Let me get this straight. The US Government gives a company 123 billion dollars and now no one can figure out where the money went?? And this is the same US Government that wants to educate my children, value my home, control my thinking and take charge of my medical problems. But, I sure wish I’d been born in the United States!
Weren't the Klintons' connected to some dirty money AIG deal?
Ha, ha; I don’t laugh easily, but burning it isn’t as fun as spending it!
They'll need another $500K dinner party to figure that one out.
Bonuses, of course.
QUESTION Did Sen Dodd make any payments on the VIP Countrywide mortgages he got?
FOR YOUR REFERENCE Since June, Sen Dodd has faced an ethics inquiry over allegations that he received preferential treatment on two mortgages in 2003 from major lender, Countrywide Financial. And then came the dramatic financial meltdown last month, placing Dodd at the center of a controversial $700 billion financial rescue plan.
As a member and later chairman of the Senate Banking Committee, Sen. shoulders a good deal of the blame for the collapse of the national housing market, the subprime-mortgage-market meltdown and the convulsions on Wall Street.
Reams of legislation Dodd has written or advocated affecting the housing, lending, insurance and securities industries have drained hundreds of billions out of the economy, ballooned the federal debt, cost tens of thousands of people their jobs and driven hundreds of thousands of homeowners into foreclosure, bankruptcy or both.
For his efforts, Sen. Dodd has been rewarded in the 2008 election cycle alone with $7.65 million in campaign contributions (he took in $11.7 million in all) from the securities, insurance, real-estate and commercial-banking industries. With $165,400, Sen. Dodd also tops the list of members of Congress who took campaign cash from Fannie Mae and Freddie Mac since 1989. Sen. Barack Obama, the self-styled agent of change, is a distant second at $126,000....
SEN DODD'S CAMPAIGN CONTRIBUTORS
SAC Capital Partners, $282,000;
United Technologies, $263,400;
Bear Stearns, $205,600;
St. Paul Travelers, $205,400;
Royal Bank of Scotland, $203,750;
Goldman Sachs, $175,600;
Morgan Stanley, $155,000;
Credit Suisse, $154,550;
Merrill Lynch, $134,950;
The Hartford, $94,350;
Bank of America, $91,300;
JPMorgan Chase, $129,150;
Hartford Finance Services, $101,500
Lehman Brothers, $128,400;
General Electric, $108,250;
Deloitte Touche, $108,000
Wonder how many sex acts taxpayers paid for fatstuff-- AIG's ex-CEO Sullivan. Lookit this guy--he's gotta be paying for it. No decent woman would voluntarily perform a sex act on this pig. Sullivan walked away with a $47M platinum parachute.
AIG greedsters got $122.5 billion tax dollars AND the back of the hand for excessive perks including a $440,000 junket at this luxe California spa AFTER the feds bailed them out---one of several posh junkets AIG planned.
AIG also said it will lock up $600 million in deferred compensation and bonuses that had been set aside for the financial products group, which are "largely responsible for AIG's collapse." Included in the $600 million is $69 million for Joseph Casano, the former head of that unit, as well as $93 million for five other top executives.
Shortly after its first $85 billion injection, for example, the company spent $440,000 for a corporate retreat at a swanky California resort. "AIG's belief is that they had the party, and the taxpayers will have the hangover." When Sullivan stepped down in July, AIG said his severance package totaled $47 million - far above the $19 million that AIG says it will freeze.
Casano, who's financial services group caused the meltdown, was rehired and had been getting $1 million a month in consulting fees (the payments APPARENTLY stopped last month--but you never know with these shysters).
EXCERPT: A.I.G. Agrees to Let New York Review the Propriety of Its Pay Packages
By JONATHAN D. GLATER, NY Times, October 16, 2008
A.I.G. would provide information on compensation, bonuses and other payments to determine whether the payments were proper and would also cancel 160 conferences and other events that would have cost more than $8 million.
Among the events that A.I.G. has agreed to cancel are a $750,000 best operator event in Las Vegas and a $500,000 risk management conference scheduled for the Ritz Carlton in Half Moon Bay, near San Francisco. The company will also cancel a $350,000 sales conference in November at Sea
Island, Ga., and a $190,000 meeting scheduled for Scottsdale, Ariz., in January.
A weeklong California retreat that a subsidiary, AIG General, held for sales agents cost $442,000 and expenses included $150,000 for food and $23,000 in spa charges.
A.I.G. had agreed to suspend a $10 million severance payment to its chief financial officer, Stephen J. Bensinger, who is leaving the company. On Thursday, the Federal Reserve reported that its loans to A.I.G. totaled $82.9 billion as of Wednesday, up from $70.3 billion a week earlier. In September, the Fed authorized a bridge loan of up to $85 billion. This month, the central bank agreed to extend an additional $37.8 billion to the company.