Posted on 03/04/2009 7:07:19 AM PST by marshmallow
The American International Group has drawn scorn from legions of taxpayers and lots of lawmakers (not to mention the writers at “Saturday Night Live”). And Ben Bernanke, the chairman of the Federal Reserve, is pretty peeved at the company as well.
Mr. Bernanke spoke on Tuesday of his ire about the government’s multibillion-dollar rescues of A.I.G. when asked by Sen. Ron Wyden, a Democrat from Oregon, “At what point will the taxpayer no longer be on the hook for the massive A.I.G. failure? What is the endgame for American taxpayers?”
Mr. Bernanke testified that nothing in the recent financial crisis had made him more angry than the debacle at A.I.G., whose financial products division he likened to a hedge fund, taking huge risks that ultimately brought the entire company to its knees.
A.I.G. owns an array of insurance companies around the world, but it was nearly brought down by a unit in London, which agreed to backstop huge amounts of mortgage-backed securities through contracts known as credit-default swaps. When the underlying securities plunged in value, it was nearly overwhelmed by demands for more collateral, forcing the United States government to throw it a lifeline. (And the lifeline keeps getting bigger.)
“This was a hedge fund, basically, that was attached to a large and stable insurance company,” Mr. Bernanke told lawmakers on Tuesday, later adding, “There was no regulatory oversight because there was a gap in the system.”
His remarks sound a lot like what Edward M. Liddy, A.I.G.’s chief executive for the last six months, told Andrew Ross Sorkin for Tuesday’s DealBook column in The New York Times.
“It’s an interesting structure where you have an insurance company that works really well and on top of it is a holding company, and the holding company’s biggest asset is this huge....
(Excerpt) Read more at dealbook.blogs.nytimes.com ...
related opinion:
http://www.freerepublic.com/focus/f-news/2198935/posts
“Hedge fund”? Pffft ... try money gobbling black hole run by incompetents and thieves IMO.
I am with the New York Times on this. Who are we bailing out in AIG?
There’s a good question - What’s the AIG Exit Strategy?
bookmark
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.