AIG another 37.5 billion and another trip planned
- Thread starter hope7134
- Start date
broke link.
http://www.fool.com/investing/dividends-income/2008/10/09/aigs-second-bailout.aspx
you can also google: aig bailout or aig bailout spa
click on the news site, there's lots of information about this.
AIG's Second Bailout
By Morgan Housel
October 9, 2008 Comment (1) Recommend (3)
You thought $85 billion was enough to pull AIG (NYSE: AIG) out of the mud? Please! The company is now on track to burn through that amount like no one's business, and now it's getting more cash from its new majority investor, the U.S. of A.
AIG will get as much as $37.8 billion from the Treasury, on top of the $85 billion it was granted when it nearly croaked a few weeks ago. That's right, yet another move to keep the insurance behemoth from careening out of control, sending financial markets into more of an abyss than they're already in.
Another bailout? Are you kidding me?
How did AIG blow through the initial bailout money so quickly? It wasn't that anyone underestimated how much cash it would need, but that everyone -- the Treasury included -- underestimated how choked up financial markets would get in the ensuing weeks after the bailout was first put on the table.
The root of the current mess is that global investors are scared out of their minds, and won't touch even the safest-of-safe debt instruments short of Treasury bills. As the market for even investment-grade debt threw in the towel, AIG was left short of the two things a leveraged institution needs: cash and time. As has been the case over the past month, the only bank account big enough to step up to the plate and unclog the plug was Uncle Sam himself, and hence the additional loan needed to cover AIG's shortfall.
What this means for the market
Last week, Warren Buffett warned markets that the $700 billion bailout -- while absolutely necessary -- may not be quite enough to stop the bleeding, hinting that the price tag may indeed need to rise. If AIG's newest woes teach us anything, it's that Buffett's warning might be spot-on. As financial markets keep struggling to tread water, the amount of cash needed to make a meaningful difference just goes up and up.
In AIG's case, that could mean having to sell more of itself down the road in order to repay the Treasury's loan. If other banks relying on the bailout plan -- such as Goldman Sachs (NYSE: GS), Morgan Stanley (NYSE: MS), and Bank of America (NYSE: BAC) -- venture down that same path, it could ultimately mean having to pony up more equity to taxpayers. In the long run, that will be detrimental for those holding out for a quick market rebound.
This story just keeps getting better and better.
For related Foolishness:
The Fall of AIG
The Wall Street Panic of 2008
Sick Bits From the Congressional Hearings
-------------------------------------------------------------------
http://www.businesssheet.com/2008/1...ng-wild-aig-s-third-retreat-is-a-golf-getaway
Bailout Execs STILL GOING WILD: AIG's THIRD Retreat Is A Golf Getaway
Hilary Lewis | Oct 10, 2008 12:37 PM
As AIG execs are trying to recover from their spa scandal, news emerges that officials also spent possibly $500,000 on a golf retreat at the Mandalay Bay Resort in Las Vegas.
This is the third retreat AIG had scheduled for the month after it was bailed out by the federal government. Maybe employees just wanted to take their minds off of the woes at their firm. Ironic then that this post-bailout partying scandal won't seem to go away.
NY Post: The Post has learned that officials [at AIG] spent tens of thousands a day on golf outings after collecting a huge government bailout...
The golf and spa outing Sept. 28-30 came just two weeks after the Federal Reserve stepped in Sept. 17 to save AIG from imminent bankruptcy from it bad bets.
The outing for 50 AIG representatives - said by several sources to cost as much as $500,000 - was at the Mandalay Bay Resort in Las Vegas. Hosting the junket was Keith Burger, the national sales manager of AIG Sun America's wholesale variable annuities unit, and Leslie Hunnicutt, the unit's managing director.
An AIG spokesman called the Mandalay Bay outing a "sales and training event" and disputed claims it cost $500,000, saying it cost only about $50,000.
See Also: After An Exhausting Bailout, AIG Execs Needed A Break!
AIG Gets Another $38 Billion Bailout, Takes Another Vacation
AIG Cancels Trip To The Ritz
Now Wachovia's Brokers Are Going On A Cruise
First AIG, Now Barclays: Anger At Luxury Events Spreads
Subscribe to The Business Sheet: RSS, email newsletter (no spam)
More:Bailout, Hilary Lewis, Wall Street, AIG, finance, gaffes, scandal, U.S. Government
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you can also google: aig bailout or aig bailout spa
click on the news site, there's lots of information about this.
AIG's Second Bailout
By Morgan Housel
October 9, 2008 Comment (1) Recommend (3)
You thought $85 billion was enough to pull AIG (NYSE: AIG) out of the mud? Please! The company is now on track to burn through that amount like no one's business, and now it's getting more cash from its new majority investor, the U.S. of A.
AIG will get as much as $37.8 billion from the Treasury, on top of the $85 billion it was granted when it nearly croaked a few weeks ago. That's right, yet another move to keep the insurance behemoth from careening out of control, sending financial markets into more of an abyss than they're already in.
Another bailout? Are you kidding me?
How did AIG blow through the initial bailout money so quickly? It wasn't that anyone underestimated how much cash it would need, but that everyone -- the Treasury included -- underestimated how choked up financial markets would get in the ensuing weeks after the bailout was first put on the table.
The root of the current mess is that global investors are scared out of their minds, and won't touch even the safest-of-safe debt instruments short of Treasury bills. As the market for even investment-grade debt threw in the towel, AIG was left short of the two things a leveraged institution needs: cash and time. As has been the case over the past month, the only bank account big enough to step up to the plate and unclog the plug was Uncle Sam himself, and hence the additional loan needed to cover AIG's shortfall.
What this means for the market
Last week, Warren Buffett warned markets that the $700 billion bailout -- while absolutely necessary -- may not be quite enough to stop the bleeding, hinting that the price tag may indeed need to rise. If AIG's newest woes teach us anything, it's that Buffett's warning might be spot-on. As financial markets keep struggling to tread water, the amount of cash needed to make a meaningful difference just goes up and up.
In AIG's case, that could mean having to sell more of itself down the road in order to repay the Treasury's loan. If other banks relying on the bailout plan -- such as Goldman Sachs (NYSE: GS), Morgan Stanley (NYSE: MS), and Bank of America (NYSE: BAC) -- venture down that same path, it could ultimately mean having to pony up more equity to taxpayers. In the long run, that will be detrimental for those holding out for a quick market rebound.
This story just keeps getting better and better.
For related Foolishness:
The Fall of AIG
The Wall Street Panic of 2008
Sick Bits From the Congressional Hearings
-------------------------------------------------------------------
http://www.businesssheet.com/2008/1...ng-wild-aig-s-third-retreat-is-a-golf-getaway
Bailout Execs STILL GOING WILD: AIG's THIRD Retreat Is A Golf Getaway
Hilary Lewis | Oct 10, 2008 12:37 PM
As AIG execs are trying to recover from their spa scandal, news emerges that officials also spent possibly $500,000 on a golf retreat at the Mandalay Bay Resort in Las Vegas.
This is the third retreat AIG had scheduled for the month after it was bailed out by the federal government. Maybe employees just wanted to take their minds off of the woes at their firm. Ironic then that this post-bailout partying scandal won't seem to go away.
NY Post: The Post has learned that officials [at AIG] spent tens of thousands a day on golf outings after collecting a huge government bailout...
The golf and spa outing Sept. 28-30 came just two weeks after the Federal Reserve stepped in Sept. 17 to save AIG from imminent bankruptcy from it bad bets.
The outing for 50 AIG representatives - said by several sources to cost as much as $500,000 - was at the Mandalay Bay Resort in Las Vegas. Hosting the junket was Keith Burger, the national sales manager of AIG Sun America's wholesale variable annuities unit, and Leslie Hunnicutt, the unit's managing director.
An AIG spokesman called the Mandalay Bay outing a "sales and training event" and disputed claims it cost $500,000, saying it cost only about $50,000.
See Also: After An Exhausting Bailout, AIG Execs Needed A Break!
AIG Gets Another $38 Billion Bailout, Takes Another Vacation
AIG Cancels Trip To The Ritz
Now Wachovia's Brokers Are Going On A Cruise
First AIG, Now Barclays: Anger At Luxury Events Spreads
Subscribe to The Business Sheet: RSS, email newsletter (no spam)
More:Bailout, Hilary Lewis, Wall Street, AIG, finance, gaffes, scandal, U.S. Government
Share:Buzz up!ShareThis
< Prev. StoryNext Story >
Last edited:
EvilEngineer
Member
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I swear AIG execs are just begging to get shot...
This is overrated. What about the parties at the Department of Interior? What about the millions, if not billions, of wasteful spending on government credit cards by government employees? Be careful of the government when it points fingers at everyone by itself.
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