Subprime mess, blame, winners, losers?

go make me a sammich!

 

Sabanfan, makes some great points, he is 100% correct. Their last minute attempts to secure private bank loans failed, because their credit rating was downgraded Friday of last week. They could have been done without this loan. So you do own a piece of it. They got greedy insuring faulty mortgage securities packages with companies like Lehman Bros and Bear Sterns. Now they have to pay up.

 

I wouldn't call it greedy, but it was unwise. AIG's problems go back years beginning with false disclosures about their insurance reserves which propped up the stock. Elliot Spitzer made getting Hank Greenburg (former AIG CEO) his life's work. At the same time,Greenburg was investing heavily in credit default swaps which eventually led to this mess when the subprime market went bust. For decades. Greenburg had the Midas Touch and the stock market loved him. When I started at AIG 25 years ago, the stock was in the $120s and it would split every year. The impression was they could do no wrong. Lesson learned.

The current leadership at AIG has been trying to fix what was broke for 3 years but the damage was done. It's time to pay the piper.

 

Greenburg, his son and his nephew controlled the insurance industry for years and had alot of power on the stock market. I call that greed and too much influence for one family imo. Like you said it has backfired.

 

You're wrong. I agree that AIG's near demise can be laid at the feet of the Greenburgs, but the Insurance side of AIG is well run and strictly regulated. Only recently has the company gotten into the personal lines (Homeowners & auto insurance) which affects "the folks". AIG has always been known as an innovator, writing policies that no one else would touch such as Pollution coverage in the 80s and, more recently, Terrorism Insurance. We write tons of E&O, D&O, Med Mal, Environmental, Toxic Tort, Products Liability, etc., including huge excess layers and reinsurance. All of these lines are extremely profitable. AIG is a giant in the insurance industry, but hardly a negative influence. Stupid investments in non insurance areas is what got them in trouble. There were also wise acquisitions which help the bottom line and offer valuable assets for them to sell off right now. For instance, did you know that AIG owns an aircraft leasing company and is Boeings biggest cutomer?
Don't let your liberal politics completely color your opinion of a company that has made mistakes but is still trying to do the right thing.

 

So lets think about this. Nobody would loan them money because their own money management sucks. So wait.. How about us taxpayers loan them money. Yah that makes a lot of Fin sense. And great now we own a stake is a company that can't even run its own business. I will gladly take my stake back.

This type of bailout is stupid. A company can fail. And if you invested or had your eggs with that company then you should reap the failing also. That is the name of game.

BTW where do you think the govt is going to get this money to loan them? 1. China 2. Print more.

 

My politics have nothing to do with the facts. So lets keep politics out of it, which you think drives the life of everyone including yourself. You want to make this out to be an argument then ok, you got it. The innovative policies you speak of are the same innovative policies that they wrote insurance for mortgage giants and people who bought a ton of mortgage securities. Very innovative, not to see the risk when the severe deregulation of those industries caused this mess that we are seeing right now. How innovative is that your train of thought. You so convienently left that innovative policy writing out of your post. Now they have to pay those policies and guess what they are borrowing from their profitiable subsidaries, which is the insurance side. If the insurance side had the money they wouldnt have needed a loan.

 

You really should get your facts straight before spouting off like a fool. AIG has more than enough assets to pay back the loan with interest in a relatively short period of time. Unfortunately, the rating agencies couldn't wait to downgrade AIG thus doubling their short term needs and making the bailout the only solution. The raters were urged to wait 90 days and let AIG get themselves out of trouble, but they couldn't wait to do their part to take down a major player.

Had AIG gone under, you liberals could gleefully have danced in the streets at the sight of Big Business geting theirs, but the effect on the economy would have been disastrous.

http://www.nytimes.com/2008/09/16/opinion/16lewitt.html?_r=3&ei=5070&emc=eta1&oref=slogin&oref=slogin&oref=slogin

 

Whats a relative short period of time to you?, assets only matter in that situation if you have a buyer to make them liquid. Thats the point of getting a cash infusion from the federal government, as much as you want to politicize this, you cant.

 

FYI