AIG: the next scandal

beaujolais-nouveau

AIG's supposedly solvent insurance business may be at least as troubled as its reckless financial-products unit. Far from being "healthy," ... Most of this as-yet-undiscovered problem, Gober says, lies in the area of reinsurance, whereby one insurance company insures the liabilities of another so that the latter doesn't have to carry all the risk on its books. Most major insurance companies use outside firms to reinsure, but the vast majority of AIG's reinsurance contracts are negotiated internally among its affiliates, Gober says, and these internal balance sheets don't add up. ...

AIG has been able to indulge in "regulatory arbitrage" on a global scale, creating totally unsupervised businesses that act beyond the purview of any government (AIG has repeatedly said that its problems were confined to the London-based financial-products unit). The company's ability to escape an umbrella regulator was one reason the financial-products group was able to sell, indiscriminately and without hedges, credit-default swaps around the world in the belief that they could never all come due at once. They did.

http://www.newsweek.com/id/189917

tricki1

Why does nothing banks are found out to be doing surprise me any more? And I was pretty cynical before the meltdown about bankers. If this is even vaguely accurate then millions of policies are not worth the paper they are written on, and they have already spent most of the bailout money they have got so far paying off other banks like Goldman and paying bonus's to those who created the problem. (some even after left the company)

AIG employees will need more than just walking in pairs and taking off name tags to avoid anger - if this manages to get into the mainstream then barricades and water cannon are a basic minimum.

Interesting times...

vivatifosi

Did anyone catch the Daily Show Global Edition tonight? I liked the rap reference, it renamed AIG as...

The Notorious AIG

bubblesmoney

see

the rise and fall of the AIG financial products unit. and see this opinion of a fraud investigator on possible fraud at AIG.

and this one below is a gem.

see how monkeys react to unfair rewarding situations, see how this relates to AIG, RBS etc and understand the outrage people feel at unfair rewards given to the chimps who ran these institutions. perhaps we are not that different from monkeys after all.

vivatifosi

bubblesmoney wrote: »

see how monkeys react to unfair rewarding situations, see how this relates to AIG, RBS etc and understand the outrage people feel at unfair rewards given to the chimps who ran these institutions. perhaps we are not that different from monkeys after all.

Bubbles you are always posting interesting links, but that one is fantastic. Thanks, would never have come across it myself and it was really insightful.