BerkeleyBob

AIG Counterparties: The SIGTARP Report

Exactly why I previously described AIG as an unregulated off shore bookie that welched on its bets. We are in Alice's wonderland, where the Cheshire Cat redefines words so they have no meaning.

Bear Verdict Should Please Wall Street

I thought this was a surprising jury acquittal, based on the news reports I read. It is quite similar to the scandal which led to Henry Blodgett's change in career. It is misrepresentation and probably actionable fraud to assure your clients that in your opinion an investment is "safe" and "profitable" if your private communications to your fellow thieves is to the contrary.

Wall Street Breakfast: Must-Know News

I am puzzled by the jury's acquittal of the two Bear Stearns fund managers. Looked like a prima facie case of misrepresentation, looked quite similar to what caused Henry Blodgett to change careers. As to AIG, it was not (just) a rogue division headquartered in London that imploded. Hank Greenberg, quite unrepentant, was forced to resign because he approved sham transactions with a reinsurer to prop up AIG's stated assets. I am sure many fine and ethical people worked for AIG but there was rot at the top of that organization, which was structured to evade to the maximum extent possible, any and all government regulation.

Cramer Hammers AIG Founder Hank Greenberg

Under the leadership of "Hammerin" Hank Greenberg, AIG was no more and no less than an unregulated off-shore bookie that welched on its bets. He was forced to step down as CEO because of "accounting irregularities" ie, window dressing of reinsurance (largely unregulated) to prop up earnings. On this one, Cramer is right, but the remedy is difficult. AIG does have significant assets which could be spun off with returns to the taxpayers who have fronted many billions but in the present market, who wants to buy a profitable and large airplane lessor?

AIG Is Dead, Long Live AIG

Seeking advise from "Hammerin" Hank Greenberg is a little like seeking advise from Bernie Madoff or Sir Alan. AIG was screwing around with window-dressing and phony reinsurance before the credit default swap collapse, and Greenberg was in charge at the time.

Wall Street Breakfast: Must-Know News

Yeah, I've been getting the phony virus alert on this site too. Don't respond, close the box and back up a page. Works so far for me. The quality of discourse on SA varies, and a few of the posters are obnoxious but all in all this is far better than the unmoderated Yahoo finance message boards, and the Street's Stockpickr has also had some problems.

Can We Insure Against Systemic Risk?

It isn't clear to me that the contracts AIG was peddling were insurance as the term is commonly understood. The absence of requiring an insurable interest, state regulated reserves, and nominal premiums suggest that it was more akin to an unregulated offshore casino. Of course, the rating agencies had a role in the scam. AIG carefully structured its activities to circumvent the woefully lax regulatory structure, including a feckless SEC, etc. etc.

How AIG FP Brought Down the World

If you check the past few issues of Wired, there was an interesting article which I did not fully grasp about the risk prediction algorithm. Think the article was titled "The Equation That Failed to Predict". The central point was that the algorithm was mis-applied.

Credit Rating Reform No Substitute for Investor Vigilance

I don't know that reliance on primary information, certainly by an individual investor, is sufficient unless combined with realistic skepticism. The regulatory system which is intended to provide transparency and accuracy failed abjectly in detecting Madoff. The regulatory system failed abjectly in the S&L crisis of the 80's. Perhaps a realist would have seen Madoff's returns as too good to be true but some astute high value investors weren't informed their investments were "steered" to the Ponzi scheme. The rating agencies have a great deal to answer for, and I put no value on their grades.

Bail Out for Dummies - Part I

Excellent article and a clear summary of the extent of the disaster. Thought the post was better than far too many of the comments which followed. Let's not turn this forum into the Yahoo finance message boards.

Dear Mr. Greenberg: Please Stop Talking in Public

I am persuaded on the evidence of "Hammerin" Hank" Greenberg's public comments and exercise of chutzpa in suing the feds for decreasing the value of his shares, that the man is seriously deluded. His attempt to re-write history has the virtue of audacity, but no element of veracity. I have previously described AIG as an unregulated off-shore bookie, aided and abetted in its financial fraud by the rating agencies. If you think that harsh, consider the collateral damage in destruction of value for pension funds and other institutional fiduciaries.

The Misuse of Language in the Financial World

A very helpful and significant review. Not sure that AIG's transactions were in fact "insurance contracts" because they were intended and structured to avoid regulation, reserve requirements, and were apparently a vehicle for short-sellers who did not have an insurable interest in the underlying secured loans. I described AIG as "an unregulated off-shore bookie operation" which is cumbersome, but maybe accurate. ...

Wall Street Breakfast: Must-Know News

I am in the happy position of not owning 1 million or so BofA stock, like the Finger family, so I have no dog in that particular fight. However, I don't see why any shareholder would not be more irate over the Countrywide acquisition and the abysmal result of Ken Lewis's (and sleazebag A. Mozillo) opinions that the purchase was a great deal for everybody. Merrill Lynch appears solvent and was no more than a conduit for the toxic loan packages, right?

New Information Emerges About the AIG Bonuses

Isn't part of the problem with AIG that the CDS and derivative swaps were not "insurance" and that AIG, with the help of the rating agencies, mis-priced the risk and the valuation of the underlying debt? AIG fostered speculation and short-selling by selling its guarantees to those who did not have a legitimate insurable interest. It appears that AIG's London office operated outside the regulatory purview of any governmental agency and that the "complexity" of the financial instruments was a disguise for criminal fraud.

Wall Street Breakfast: Must-Know News

I am not concerned too much by federal bailout funds used by AIG to unwind CDO's etc., the so-called "external" payments. The risk was drastically mis-calculated but leaving foreign central banks and institutional investors (pension funds, etc.) to take the loss would ruin our standing in the international marketplace. The financial crisis is global in scope, and we are all interdependant in ways we don't fully understand. The "internal" payments to the geniuses who created the mispriced trades (not insurance, not regulated) are another matter. Why wouldn't any taxpayer have standing to block the payments? It is our money. AIG executives are dancing on the rim of a volcano.