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AIG Reveals $10 Billion Loss Mega Loan Won't Cover
Something AIG neglected to tell anyone before going to the well. From TFA:American International Group Inc. owes Wall Street's biggest firms about $10 billion for speculative trades that have soured, according to people familiar with the matter, underscoring the challenges the insurer faces as it seeks to recover under a U.S. government rescue plan. The details of the trades go beyond what AIG has explained to investors about the nature of its risk-taking operations, which led to the firm's near-collapse in September. In the past, AIG has said that its trades involved helping financial institutions and counterparties insure their securities holdings. Apparently, the terms of the $150 billion mega loan won't cover these losses, so begins a new episode in this Greek tragedy in which a patient recovering from a massive gunshot wound gets a deadly infection from a shaving cut. The article also says that these losses stem from AIG essentially acting like a brokerage house instead of an insurer. The issue with AIG are credit default obligations ( CDO ) it bought from Goldman Sachs Abacus program. But not to worry. The government is in charge. Posted by: badanov 2008-12-10 |
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