Duude

Current Rush to Judgment Against AIG and Its Counterparties Is Unhelpful

It remains to be seen whether AIG will ever have enough value in its existing assets to completely offset what is owed back to taxpayers. I see it as doubtful especially considering the fact that politics will continue to influence decision-making due to bubba populism that is akin to ready, fire, aim.

Bankrupt Deadbeat Banks Stiff Taxpayers

Its called noncumulative preferred stock, and it means they don't have to pay but they also can't pay out common stock dividends while skipping the noncums. As for our Federal government being the least contract-respecting institution in the world today, I disagree. Have you ever heard of Venezuela, Russia, or China? In fact, I can come up with many countries less contract-respecting than the U.S. Though, I do agree that what bailing out these firms isn't capitalism, but then we've only had a hybrid-capitalist/soci... model all along. Government acts like it exists for the sole purpose of intervening and it is that social engineering that makes it a capitalist/socialist hybrid. That's the economy that failed.

AIG Needs Dissolving

A dissolution is entirely the worse thing to do. While a 100% payback of AIG's debt to taxpayers may be almost impossible, I want every dime back that we could possibly receive. The insurance companies under AIG are actually quite valuable but can only be sold at a discount currently due to both the current economic environment and the perception that AIG MUST sell now. If we're going to sell out now, we're guaranteeing as little money as possible. If we sell this out now, we ought to sell out our ownership in GM and Chrysler now as well. While it will be almost impossible to get back 100% of taxpayer money with AIG, its absolutley certain we won't get it back with Chrysler and GM. The amount we've dumped into these two losers is more than they've been worth in their hey day, and they'll never get their before. Additionally, its certain the automobile makers will need more money still.

The Five Worst Bailouts

I'm a little surprised we have no mention of Fannie or Freddie. While they were clearly bailed out and continue to be bailed out as they write down mortgage balances and offer low interest rates for many homeowners who hadn't enough good sense to buy what they could afford in the first place. Many of these same homeowners are now bailing on their new mortgages as well as unemployment rates skyrocket.

Wall Street Breakfast: Must-Know News

You're dreaming. Franklin Raines, and every Democrat politician, not to mention every company CEO who has been supportive of the Obama Administration will escape prosecution. Look no further than GE who cooked their books, knowingly dispersed false and misleading info and they only got a $50 million fine from the SEC. They're a $150 billion company while Hank Greenberg was fined $15 million and is no longer a billionaire.


On Aug 07 08:42 AM spald_fr wrote:

> [Greenberg settles SEC charges. Hank Greenberg, former CEO and chairman
> of AIG (seekingalpha.com/symbo...), agreed to pay $15M to
> settle SEC charges accusing him of improper accounting transactions
> between 2000 and 2005.]
>
> Well, this is good news. I guess the SEC will now go back to Franklin
> Raines (who received $90MM in bonuses since 2000) and get some of
> that bonus money back. Maybe Barney Frank, Chris Dodd and Rahm Emmanuel
> will lead the charge for justice.

Moral Hazard, Goldman Edition

I'm more than a little confused why listing oneself as a bank holding company doesn't require more oversight of leverage used. While I not quite sure what the difference might be (it appears to be no difference) I don't know why large investment banks were cautious of becoming bank holding companies. Its obviously all good.

Why Congress Is Asking Bernanke Bogus Questions

Weighing all that was said it appears very likely that Congressman Issa's accusation is right on the mark. Whether Bernanke personally threatened Lewis with financial support or his job is not as clear. Other Fed officials could have passed the message in a host of ways without Bernanke speaking the words himself. Some feel that the seriousness of the situation warranted pulling out all the stops. I feel there is a real problem with government strong-arming business leaders to do what's not in the best interest of their own shareholders. But it seems also likely that Lewis did his part to see the deal done by purposely failing to disclose to shareholders what he knew before the Merrill vote. Lewis was in a catch-22. If he disclosed all, shareholders clearly would have voted it down. That could have meant his job was at risk if and when the company sought government support.

AIG: Ready to Rally?

AIG is still dead in the long run. Asset sales will hardly cover government debt when everything is done. Additionally, I just got a notice from my auto insurance company 21st century that their parent, AIG just sold them to Farmer's Insurance which is owned by parent Zurich Financial Services. I wonder whether they will keep to the 21st century model or raise my rates to Farmers' Insurance rates?

Not the Tax Clawback I Had in Mind

The whole argument about tax clawback is as much a waste of time as the time the Congress and later the Senate will spend debating and voting on this measure. This is such an obvious overreach of the Constitution by targeting a select group for higher taxation it leaves me in stitches. Additionally, many congressmen already know this too and are banking on it being thrown out in court even though they voted aye on the bill. This is all a show. If we really want a pragmatic tax clawback lets put one on Congress for every wasted moment debating stupid bills like this one or one of the thousands of bills honoring various people over the course of a year.

Getting a Tax Clawback Right

For every action, there is a reaction.
If we were to use a tax clawback to get back bonus money from AIG executives, what case can be made to keep us from using this same mechanism on others? The list is quite long. How about Angelo Muzillo who as CEO of Countrywide mortgage wrote more sub prime and alt a mortgages than you can shake a stick at? What about Herb and Marion Sandler who pushed Sub prime and alt a loans and then cashed out in 2006 with billions? What about Franklin Raines, James Johnson, and Daniel Mudd who all lead Fannie Mae into the toilet but managed to cash out with tens of millions in ill gotten gains by lobbying Congress to block any oversight of their companies? What about taxing all those Congressmen that screwed us all by accepting lobbyist money in exchange of blocking that same supervision, while leaving the American public with the bill? The list goes on and on and on. I'm outraged over the bonuses for AIG too, but how are they so different from these other clowns?

AIG Bonuses: The Tipping Point Toward Decisive Action?

"The failure of the Treasury Department and the Federal Reserve to review and renegotiate the bonus plans as a condition of federal assistance last fall - despite the fact that the plans had been public knowledge since May - reflects the rushed, ad hoc nature of the deals that were struck."

I totally disagree. Senators Snow (R) and Wyden (D) had proposed an amendment to the stimulus bill to block just this type of bonus payout that AIG is doing. Senator Chris Dodd (D) and Chuck Schumer(D) together with the Obama administration's backing dropped it from the stimulus bill. This isn't due the stimulus bill being rushed. One can only speculate where the money trail ends. But Geithner, Obama, Schumer, Dodd and most of Congress knew about this bonus plan more than a month ago, yet AIG still received another disbursement of 30 billion in the last few weeks. What is really happening is that these politicians misunderstood the amount of anger that would ensue from the public. Their own anger is contrived and meaningless banter to cover their tracks.

Don't Blame Mark-to-Market for This Crisis

I realize the ease of blaming M2M and then point at all that cash we're dumping on these firms to build up their capital. But I have to consider the wisdom of the investment banks that foolishly believed in their quants and leveraged their bets while knowing full well that M2M was the accounting standard in use. Who has ever fully leveraged a stock account with margin and learned how critical your positions are to the health of your account? Now multiply that leverage 30 fold and how much more important should one's knowledge of their portfolio be?

AIG Needs Transparency, Now

I'm still trying to understand how it is that AIG isn't being indicted for fraud. I understand that the cds market wasn't regulated, but it was marketed as insurance. If they don't have anywhere near the assets to back the insurance they wrote, that's fraud. Its not hardly any different from Madoff's ponzi scheme. If the money recovered from the Madoff scheme doesn't cover all those scammed, are we going to bail them out too?

The Bane of Broken Balance Sheets

"The borrowing capacity of the US Government is limited. I don’t know what the limit is – which straw will finally break the back of the camel, but there is a limit. The borrowing capacity of our government should be used to its best effect, and playing as a bank or a hedge fund is likely not the right answer."

This is so true, but hard for many to see and won't acknowledge till its too late. I figure only about 10% of our political representatives believe this now.
The first signs to our economy will likely be Foreign governments not bidding as actively for our debt leading to higher interest rates. That's when it will sink in with another ten percent of our politicians that the Federal Reserve really doesn't have the handle on interest rates that many had relied. I figure it will be years of higher interest rates before even one half of Washington understands that we can't borrow our way to prosperity. As for the states, there is no hope. They will continue on the same path of relying on the best years' tax revenues to forecast how fast they can spend. When things don't add up states like California will double taxes to offset shortfalls.

The AIG Scandal

Selling long dated puts doesn't have 'unlimited risk', selling calls have unlimited risk. selling puts is limited to the risk of the company going bankrupt minus the premium you received while selling naked calls in theory leaves one with an infinite exposure to risk should a stock go to the moon.


On Mar 02 07:33 PM MaverickBian wrote:

> I remember Warren Buffett also sold billions of dollars in long-dated
> puts. Hope he will not become broke because of those almost "unlimited
> risk" investment.
>
> When he thought the market had reached the bottom around last September,
> I deeply doubted his judgment. Sure enough, his firm's profit shed
> by 96% last quarter and right now he is telling people the market
> will be in shamles throughout 2009, 180 degree turnaround in his
> tone.