Posted on 03/18/2009 11:12:59 PM PDT by Cedar
BS.
Did you listen to the testimony today of Liddy? I think he touched on this, but I’m not knowledgeable enough to really understand his answer. Something about they were in contracts with those foreign banks (and others) and obligated to pay?
Maybe you understand it better...
Well, that’s where possible criminal action might be involved? Seems to me shareholders might be shocked to know that group of 25 or so were “off limits” to monitoring and could do as they wished, no matter the risk.
I don’t see that as the “real” story either. The TARP money was to some of the bad paper we foisted on the financial markets out of the way. That was afterall the conservative thing to do.
That AIG was used to buy up some of this paper not much of a story but rather a technical detail. That the US used AIG to buy up bad paper that was in foreign hand is possibly a good thing.
That’s why I posted this thread. I know little about business law, so I’m wanting to hear from those who do know.
Not all businesses have shareholders to whom they are responsible. Also, when Enron came tumbling down, weren’t those at the top held responsible? Would these risky deriviatives with no oversight be considered somewhat criminal? Maybe not.
My posting is slow, so some of these questions may be answered before this is posted. Sorry, if so.
Who did the “OFF LIMITS” order come from would be a better question. That probably came from much higher up and long before the whole thing went down at the end of the year.
Those 25 people are probably protected or “throw aways” who will end up getting crucified for people much higher than them.
People in government.
I agree. But since it’s already a done deal, I decided to listen to the Liddy testimony on CSPAN. Interesting comments, and especially concerning how few people (out of thousands) actually brought the company down. And apparently, they were not accountable to anyone, but the CEO. Maybe a few more people knew about it.
Guess that was my point. Someone at the top knew about the terrible risks being taken and tried to keep it covered up.
Responsibility lies with the officers of the company.
There is is leadership tenet that people do not understand.
You can delegate authority, but you cannot delegate responsibility.
YOU CANNOT DELEGATE RESPONSIBILITY!
I have heard managers, and even Executive types say they delegated that responsibility to someone else.
Apparently, delegating responsibility is all it takes anymore.
As I told my son 3 times when the ‘One” gave his natioanl address.......”You have no idea how F*cked we are!”
How many payoffs do you suppose were involved here? I would say quite a lot.
That's what that particular branch of AIG did (AIG0-FP). It insured the risk positions that banks and other financial institutions took on the Sub-prime paper and it's derivative investment vehicles. Essentially, AIG was the back-stop for these investment houses and banks so they wouldn't lose their shirts. Other investment vehicles are insured this way and have never caused a problem. But, no other vehicle has ever gone this far south this quickly.
As for AIG obligations, that's exactly what they were - contractual insurance obligations to their customers and partners - customers and partners that coincidentally (not) happen to be the largest financial institutions in the world. When the US government took an 80% equity position in AIG, it also took on an equity position in those contracts and as a result, exposed the American taxpayer to all that massive risk.
There were much, much better ways of handling this other than bankruptcy and clearly other than what they did. Hank Greenburg (AIG founder and longtime CEO before he was Elliot Spitzered) spoke at some length about this last night on Charlie Rose - it's a little too complicated to go into here.
Hope that helps a little.
Yes, all the replies here help. Thanks.
I’ve just found another thread posted concerning these AIG contracts. You might find it interesting if you haven’t read it already:
http://www.freerepublic.com/focus/f-news/2209706/posts
I don't think anyone was paid off. It wasn't illegal - and still isn't. It's a little complicated to get into in this format, but this wasn't ENRON. These were legitimate contracts and legitimate partnerships that made considerable money for at least some period of time.
It should also be pointed out that AIG primary business was INCREDIBLY well run and was profitable - and may even be profitable today. But, the exposure on all these bad insurance claims has just overwhelmed AIG. Not just on the payout side, but AIG has also been hurt by the cash reserve requirements imposed on them by US State and Federal regulators - regulations that coincidentally were a result of the ENRON debacle in 2000.
My earlier point. But you have to admit as a result of unconstitutional interference from the federal government some companies whore themselves out.
I think everyone has to be careful here and not be taken in by a trojan horse scenario... after watching the hearing today, and knowing the little I know about this from reading and watching Hank Greenburg (until 2005 CEO AIG) on Cavuto many times now, I think we should not believe 1/1000th of anything coming out of any of the democrats on Capital Hill..... and even Chris Dodds had to fess up to his part in this today.
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