Monday’s blow-up at AIG (NYSE:AIG) didn’t particularly surprise those among us who have long held the view that AIG is more continuing criminal enterprise than the rock-solid bullet-proof global mega-insurance company of its delusional flacks. Proving that even blind pigs snuffle the occasional truffle, auditor PricewaterhouseCoopers stumbled over material weaknesses in AIG’s internal controls when it came to valuing bags of wet newspaper*—more formally, credit default swaps—to the tune of $3.7 billion or so in previously undisclosed losses for October and November.
December? January? Your guess is as good as any. Mine? Make it a Kerviel®.
The company “is still accumulating market data in order to update its valuation” of the portfolio, according to its independent auditor PricewaterhouseCoopers LLP, the insurer said in today's filing with the US Securities and Exchange Commission. AIG said it believes it has “procedures to appropriately determine the fair value” of the holdings.
Which is exactly what it said six months ago. At the risk of being repetitive: Taking a Greenberg out of the company was one thing; taking the Greenberg out of a company, something else entirely.
AIG Falls on Concern Losses May Have Been Understated
By Hugh Son and Jesse Westbrook
Bloomberg Feb. 11 2008
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