AIG shoulda been put down years ago.
“until then, AIG was the life of the party. Huge profits. Strong growth. AIG was an ATM. It earned $14 billion in 2006, $10.5 billion in 2005 and $11.05 billion in 2004.”
AIG thought they would never have to actually pay off on the reinsurance they were writing, which got riskier and riskier.
And...
Here’s the link for the evidence in the information from the “Bank for International Settlements,” as mentioned in the full version of the excerpted article linked above.
http://www.bis.org/publ/otc_hy0805.pdf
...and a quote from it.
“The over-the-counter (OTC) derivatives market showed relatively steady growth in the second half of 2007, amid the turmoil in global financial markets. Notional amounts of all categories of OTC contracts rose by 15% to $596 trillion at the end of December (Table 1), following a 24% increase in the first half of the year.1”
More on what happened in 2007-2008.
China’s imploding US ally (AIG)
http://www.freerepublic.com/focus/f-news/2084468/posts
AIG: Inquiring Minds Want To Know
http://www.freerepublic.com/focus/f-news/2192489/posts
(China)
Fed won’t say who helped by AIG rescue
http://www.freerepublic.com/focus/f-news/2200398/posts
Top U.S., European Banks Got $50 Billion in AIG Aid
http://www.freerepublic.com/focus/f-bloggers/2201213/posts
China appeals to Washington to safeguard assets
http://www.freerepublic.com/focus/f-news/2205693/posts
U.S. Federal Reserve to buy up to US$300B long-term Treasury bonds
http://www.freerepublic.com/focus/news/2209403/posts
from comments to the article:
Jimi lee 13 hours ago
I agree that the taxpayers are going to be mad but not for the reasons you state. This suit is different. Up until know all action has been to recover money from operating Banks and institutions. These institutions must have government approval to operate so they have been negotiating and the government accepting “fines” to keep the matter out of court. This one will be in court and it is being brought by shareholders not institutions. Why does this matter? Because the shareholders have no fear of government reprisals. This means that finality the actual truth of what happened will come out on the recorded in court and you and I will not like it.
The big three are being brought to the carpet in what really happened and be forced to tell the truth. The scenario unfortunately will go something like this.
There was a nice plan to help some people out who had run into some bad circumstances so the during the Carter administration the congress passed the Community reinvestment act (CRA). This was so popular that each and every president and congress continued it and added a little more help because the votes were great.
Of course this started to generate some small quantities of “toxic paper” meaning higher default rates. This was ok until the program started to get pushed heavily by Frank, Kennedy, and others including republicans over the decades. The paper started to get too risky and the companies issuing the mortgage complained that risk and cost to insure where to high.
The government winked and told them that the program was good and that they had to fined a creative way to shelter the risk. So they did. They came up with all kinds of loans and started to package the toxic paper with quality paper (debt) that investors bought and sold. They were popular because the yield was higher to compensate for the risk. But the toxic paper was growing and growing until again the companies said enough. and again the government with wink said be creative. So they did again and they created collateralized debt obligations (CDOs) which are like mortgage insurance except these are for the big boys to insure debt investments against default. That is where AIG comes in. They insured the CDOs but unfortunately they were late to the party and the music stopped with AIG, LB, Merrill, and with no chairs. They took the risk right in the face.
With these guys basically about to go under, the US taxpayer had to set in and bail out AIG. The others, with all the jobs were basically sacrificed in the name of saving the banking system.
So then, the greed of power in the politicians to created a dangerous game that grew and grew and was willing agreed to by financial institution driven by profits destroyed Trillions in the peoples wealth and cost tens of Millions of jobs. Unfortunately, this was not the case of few greedy men. The game was so popular that governments and financial institutions all over the world decide to create their own and play it too. In the end the financial crisis came and the rest is history. By the way, we are attempting to start the game over except the pressure is coming from AG holder to force banks again to make risky loans all in the name of inequality but it is really votes, power, and greed. Nice
I expect the government will settle out of court to keep the truth suppressed and claim it was better to move on then to draw this out and politically blame the greed few men from the small street in NYC.
Lesson, keep politicians out the markets because when you mess with mother natures law of supply and demand you will always lose and when mother gets mad she can be down right painful.
The government had no right to seize private property. Read this article for a more balanced (i.e. non-leftist) view of what transpired with AIG:
http://nypost.com/2014/10/09/aig-case-is-no-joke-is-there-anything-fed-cant-do/
While I find it despicable that AIG received the bail out, it's the terms that are in question here.
First off, the government SHOULD have let them fail.
Second, they have ZERO authority to size any asset without a court order.
That's what this is about, so get of your high horses!