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AIG Rewards Failure: How Could the Brightest Be So Blind?

They're not the brightest. More often, they're the most arrogant, obnoxious, offensive, deceitful individuals you could ever meet. Eisner in his book said it best when he asked of a I bank rep, "how are you going to screw me?" and he actually wanted to know! When the rep told him, he made the trade.

In this case, they all worked for one place, selling to other arrogant liars at other I banks. And When you have that much hubris in one place, this is the result. I hope some of them have learned their lessons and will leave the sector.

A Possible 10 to 1 Bet on AIG

There are some GM preferreds that are similar - trading in the 60s. Very interesting- these notes will have to be rolled over at worst and the holders compensated. ha! No seriously, they'll default on all of it. Go find a better low risk trade.

It's Time For a U.S. Sovereign Investment Fund

I've got a $20. That would buy 3% of FNM at current value, right?

Banks on the Verge of a Nervous Breakdown

LOL! Fantastic - love the no crappy bank left behind program - well put or more correctly, well shorted...

AIG Bailout: Over to Congress

Maybe I need glasses, sounds like the article said the government just bought an insurance company? what are we - China? LBO'g financial firms? WTF? Does it come with jail sentences for the dirtbag execs?

BofA, Lehman, AIG: The New Financial Realities

Between the regionals MBS AND their FNM FRE holdings...that's a good possibility...

Lehman Is Just the Thin Edge of the Wedge

ericf - the real power is in Congress and the repeal of the Glass Steagal Act in the 90s (not blaming the Clinton admin here - the Republicans were for it too-and both sides got lobbied by Wall Sttreet hard in order to get the repeal.) we're simply reaping it all now.

Banks Scramble to Refinance Their Long-Term Debt

And I thought it would be WAMU that goes under, looks like its AIG.

Counterparty Risk Management: How Could So Many Be So Wrong for So Long?

Internal auditors? are you serious? The notion that regulators and internal auditors, bear even a portion of blame on this, is laughable. They operate at too detailed a level to address the potential risk of one of a myriad of products. Maybe, the regulators could have caught it, but given the "sophisticated" or perhaps more correctly, intentionally deceptive design, of the products I doubt it.

Had they raised such an issue of such exposure, it would have been ignored as chicken little in the face of the piles of money the banks were making, they probably would have been fired. What would that assertion look like "If housing prices fall, Audit Committee, we're in deep kim chee?" You can't present speculation as audit evidence, as a result, that function is always "backward" looking, no matter how hard they try.

Your assertion exposes an important misconception which is that the governance structure actually works. My friend, the governance structure is completely broken. If such a report ever got to the audit committee, they would not have wanted to hear it either for the very reason of limiting their own potential liability!

So the CFOs have a dual motivation to prevent this kind of information from coming out 1) to protect themselves, and 2) protect their board members who truly just want to collect their checks, enjoy their meetings and head back to their mansions...

Until these board members are jailed or lose their life savings, NOTHING will change...and it won't be the internal auditors that make it happen.

Bottom Line: Chris C above has the right idea, new structured products should require the financial equivalent of FDA approval where these types of scenarios can be vetted independently outside the reach of the bankers, and in the bright light of day, which dims significantly when boards convene.

I Guess This Means AIG Stock Will Rise 10% Tomorrow

Don't worry they have a plan to "make it up on volume!"