Something AIG neglected to tell anyone before going to the well. From TFA:
American International Group Inc. owes Wall Street's biggest firms about $10 billion for speculative trades that have soured, according to people familiar with the matter, underscoring the challenges the insurer faces as it seeks to recover under a U.S. government rescue plan.
The details of the trades go beyond what AIG has explained to investors about the nature of its risk-taking operations, which led to the firm's near-collapse in September. In the past, AIG has said that its trades involved helping financial institutions and counterparties insure their securities holdings.
Apparently, the terms of the $150 billion mega loan won't cover these losses, so begins a new episode in this Greek tragedy in which a patient recovering from a massive gunshot wound gets a deadly infection from a shaving cut.
The article also says that these losses stem from AIG essentially acting like a brokerage house instead of an insurer.
The issue with AIG are credit default obligations ( CDO ) it bought from Goldman Sachs Abacus program.
But not to worry. The government is in charge. |