CBS News confirmed Friday night that federal prosecutors have informed attorneys for executives of American International Group Inc. that they are not targets of criminal charges.
The decision to conclude the two-year investigation into AIG executives comes after CBS News chief investigative correspondent Armen Keteyian first reported on April 6 that the Justice Department was likely to drop charges against Cassano.
The investigation focused on whether the insurer's executives deceived investors and its outside auditor about the company's risky investments in credit-default swaps partly tied to mortgages, the newspaper reports. Those investments nearly brought AIG down in 2008.Continue »
New York state's civil case against former American International Group CEO Maurice "Hank" Greenberg is "devastating," a judge said Tuesday.
New York State Supreme Court Justice Charles Ramos did not immediately issue a ruling, but told Greenberg attorney David Boies that prosecutor David Ellenhorn "has put together a devastating case, a very strong case, and we both know it," Continue »
The former insurance giant, which is now controlled by the U.S. government, is examining whether it has grounds for its own complaint against the powerhouse bank after losing billions of dollars insuring similar mortgage-backed securities to the one at the heart of the SEC charges, reports the Financial Times.
AIG insured $6 billion worth of Goldman's collateralized debt obligations and is believed to have incurred $2 billion in losses on the deals. According to the report, AIG is looking into whether Goldman failed to disclose key information about any of those deals, as the SEC charges it did in the current case involving hedge fund Paulson & Co.
It's important to note, Goldman didn't insure the specific deal in question - Abacus 2007-AC1 - though it insured other securities in the Abacus family of investments. Even then, AIG would have to demonstrate more than a superficial similarity to the deal in question if it wants to pursue its own complaint, according to the report.Continue »
The government owns 80 percent of AIG after bailing it out last year. Benmosche and Board members met with Feinberg last week and reportedly discussed the difficulties in keeping talented employees while adhering to compensation regulations.
"Bob feels he is in an impossible situation," a person close to the matter told the Wall Street Journal.
Last Updated: Oct. 29 11:45 AM ET
Maurice "Hank" Greenberg, the man who built the A.I.G. empire that barely stayed afloat during the financial crisis, is building up an insurance company that could compete with his brainchild, according to a New York Times report Tuesday.
Firms stand to get in the area of $1 billion in fees from the Federal Reserve to handle initial public offerings of spin-off companies and other transactions associated with selling off parts of the insurance giant, which is nearly 80 percent-owned by the government after receiving more than $100 billion in federal aid, according to the report.
That puts some of the very same banks that also got billions in taxpayer money in a position to profit from the government-supervised sell-off, raising possible conflict of interest questions. As the report questions, will the government implement stricter regulations – as it has pledged to - on banks that they are now employing?
Back in March, CEO Edward Liddy faced congressional outrage over the payment of bonuses worth hundreds of millions to the same people widely seen as responsible for the company's ruination – the infamous financial products division whose risky credit default swap transactions threatened to swallow up its parent company when they went sour.
Liddy termed those payments "distasteful" back then, though he insisted he was contractually obligated to pay them.
Passengers on US Airways Flight 1549's "Miracle on the Hudson" landing will be forever grateful for the crew that saved their lives after a bird strike shortly after takeoff in New York. However, AIG, which is US Airways' insurer, is resisting several claims from passengers regarding lost items and medical expenses, reports The New York Times.
When it comes to aviation insurance, the airline's liability is triggered only when negligence can be proven. Given the heroic actions of Capt. Chesley Sullenberger and crew, US Airways has escaped charges of negligence thus far.
The company also said its board agreed with a recommendation from Edward M. Liddy, who took over the insurer in September, to separate the chairman and CEO roles.
AIG will start a search for permanent leadership after the company's annual shareholder meeting June 30. At that meeting, investors will vote on a slate of six new independent directors.
Shareholders will also vote on a company proposal for a reverse stock split of the company's outstanding common stock at a ratio of 1 for 20, according to a regulatory filing.
AIG has spent billions in federal bailout funds to repay its trading partners, including Goldman, which received $13 billion from the insurance company. Liddy's stake in Goldman comes from the time he served on its board of directors and audit committee, before taking AIG's helm at the request of former Treasury Secretary Henry Paulson, himself a former Goldman executive.
The disclosure of Liddy's holdings, which came in Goldman's proxy statement, raises questions about whether AIG's use of taxpayer money to insulate business partners from its rapidly decreasing value was appropriate. As the Times points out, had AIG declared bankruptcy, as it might have without the government stepping in to take an 80 percent ownership stake, its trading partners would have been forced to fight in court for their claims. In that case, they likely would have gotten pennies on the dollar.
Former AIG CEO Maurice "Hank" Greenberg told a House Oversight and Government Reform Committee Thursday that the government bailout of AIG is a failure.
In a prepared statement, Greenberg said:
"That plan has failed. A successful liquidation is impossible in the present economic climate since buyers for AIG assets at fair prices simply do not exist at this time. Fire-sale prices will bring taxpayers, who now own almost 80 percent of AIG, only pennies on the dollar for their investment in AIG.
"Since the day the treasury announced its plan to liquidate AIG, value has been destroyed because AIG's people and their relationships — AIG's business — are leaving. The evidence is overwhelming and indisputable that the American taxpayer is an investor in a steadily diminishing asset."
Greenberg came to Congress with a 10-point plan to fix and rebuild AIG.
He advocated reducing government ownership in AIG, splitting off the Financial Products division and asking the banks who received billions in payments from AIG, due to the bad bets of the Financial Products division, to return some of the money in exchange for equity in the company.
Greenberg also reiterated his denial for any wrongdoing on his part in the financial fiasco. He blamed the management who succeeded him after his resignation, as the result of fraud charges, from the company on March 14, 2005. He said the Financial Product group went off on a "tangent," and in nine months booked more than double the amount of contracts for financial products, of lower quality, than it had in the past seven years.
"You would have thought that somebody should have called a halt until it regained its AAA rating and would slow down materially or discontinue," he said. The lowering of AIG's credit rating triggered the payouts to financial institutions that brought down the company.
"AIG did not have a solvency problem, it has a liquidity problem," Greenberg added.
AIG's current management issued a statement contesting the 83-year-old Greenberg's claim of innocence.
"Given that Hank Greenberg led AIG into the credit default swap business, has repeatedly refused to testify under oath about a transaction he initiated when he was still AIG's CEO, and is being investigated by the SEC and the Justice Department, we don't understand how he can be viewed as having any credibility on any AIG issue."
Daniel Farber is Editor-in-Chief of CBSNews.com
In the letter, which DeSantis appears to have given to the Times, the now-former AIG executive explains that he had nothing to do with the credit default swap transactions that led to the company needing a massive government bailout.
He complains that Liddy has failed to defend him and others at the company who were not involved in the problematic transactions, writing that he feels betrayed that "you failed to stand up for us in the face of untrue and unfair accusations from certain members of Congress last Wednesday and from the press over our retention payments."
In the letter, which ran as an op-ed piece in Tuesday's New York Times, executive vice president Jake DeSantis said he was leaving the company because "we in the financial products unit have been betrayed by A.I.G. and are being unfairly persecuted by elected officials."
Liddy appeared before Congress last week to answer for the $165 million in bonus money going to executives of the Financial Products division – the part of the company widely blamed for AIG's near collapse. Those payments, and their recipients, have been blasted by lawmakers and, notably, the attorneys general of New York and Connecticut, who have sought the release of their names.
The Stamford Advocate reports that AIG workers, some of whom have received death threats, are concerned about security at the State Capitol, as well as the ground rules for questioning.
Mark Herr, a spokesman for AIG, said in a statement Monday that the firm was negotiating with the state legislators to provide information about the bonuses, and hoped that a thoughtful discussion on the issue would remove "the overheated emotion that has swirled around it and resulted in our employees being subjected to death threats, hate mail and harassment."
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