Fed Grants AIG Additional $37B Loan
Insurance Giant Got $85B Bailout Last Month; White House Calls Firm's Near Half-Million Dollar Executive Retreat "Despicable"
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AIG CEOs Under Fire
In what could lead to another crippling blow to the Wall Street's image, Katie Couric examines Congressional hearings involving the alleged corrupt practices of former AIG CEOs.
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Photo
AIG suffered huge losses when its credit rating was cut, thanks largely to complex financial transactions known as "credit default swaps." (AP Photo/Mark Lennihan)
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Financial Meltdown
Track major events that lead to one of the most tumultuous times in Wall Street's history.
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Timeline
Credit Crunch
Feeling the squeeze? Here's a look at actions and statements from key players in Washington.
Under the new program, the Federal Reserve Bank of New York will borrow up to $37.8 billion in investment-grade, fixed income securities from AIG in return for cash collateral. These securities were previously lent by AIG's insurance company subsidiaries to third parties.
Last month, the Fed provided an $85 billion loan to the company, which was on the brink of bankruptcy.
The White House said on Wednesday it was "despicable" that AIG executives spent hundreds of thousands of dollars on a posh California retreat just days after getting the $85 billion bailout.
Lawmakers investigating the meltdown of AIG said the retreat didn't include anyone from the financial products division that nearly drove the company under, but they were still enraged that executives of AIG's main U.S. life insurance subsidiary spent $440,000 on the retreat, complete with spa treatments, banquets and golf outings.
"It's pretty despicable," White House press secretary Dana Perino said.
AIG sent its executives to the coastal St. Regis resort south of Los Angeles even as the company tapped into an $85 billion loan from the government that it needed to stave off bankruptcy. The resort tab included $23,380 worth of spa treatments for AIG employees, according to invoices the resort turned over to the House Oversight and Government Reform Committee.
"The president did not want to move forward on this rescue package to help anybody in the top positions on Wall Street," Perino said. "He was concerned about everyday people like you and me. ... He didn't do that to help top executives and certainly not to help executives go to a spa."
The hearing also revealed that AIG executives hid the full range of its risky financial products from auditors as losses mounted, according to documents released Tuesday by the panel examining the chain of events that forced the government to bail out the conglomerate.
AIG's problems did not come from its traditional insurance subsidiaries, which remain healthy, but instead from its financial services operations, primarily its insurance of mortgage-backed securities and other risky debt against default. Government officials feared a panic might occur if AIG couldn't make good on its promise to cover losses on the securities; investors feared the consequences would pose a threat to the U.S. financial system, which led to the government bailout.
AIG suffered huge losses when its credit rating was cut, thanks largely to complex financial transactions known as "credit default swaps." AIG was a major seller of the swaps, which are a form of insurance, though they are not regulated that way.
The swap contracts promise payment to investors in mortgage bonds in the event of a default. AIG has been forced to raise billions of dollars in collateral to back up those guarantees.
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BE CAREFUL WHAT YOU ASK FOR, YOU JUST MIGHT GET IT!!
Lets tie executive compensation to a fraction of a percentage of the companies profit. No Profit...NO MONEY. NO MONEY =NO MASSAGES ...
NO MASSAGES=NO HAPPY ENDINGS
No happy ending for the customers...no happy endings for the rich and greedy.
Bush is a proven idiot, which means Perino is a trumpet of the idiot.
Give $85 billion without oversight and controls, and act surprised when the same thievery that caused the problem continues.
Tip of the iceberg, I am sure...
I think its time to get the pitch forks!
or
" Pot calls Kettle Black"
i''m sure they were just trying to stimulate the ''corporate retreat'' sector of the economy ... the market should be free ... free to spend ''other peoples money''!
Stay tuned More Loop Holes and Luxury Get aways to Come.
Well said, colt. Well said. These execs simply never learn. Fire their behinds and force ''em to pay back the money !
Now THIS is a "prime" (good anology word huh) example of propaganda at its best, as well as business as usual, and just who do ya think the suckers are!?!? ROFLMAO! 1-800 wah-waah wal street!
Posted by ironwing74
Are you kidding me?? The largest private sector bailout of all time with our tax dollars and we shouldn''t assail or report about a luxurious, 1/2 million dollar company funded retreat? Many of us are holding our collective breaths about whether we''ll even have a job tomorrow or enough money to pay for heat this winter and you throw stones about uncovering an elaborate ruse by teh rich and famous. You''re one of them you arrogant snob!!!
Posted by geronimo888
The irony is lost in the politics or so they wish
[Posted by ironwing74 at 02:47 PM : Oct 08, 2008]
yes ... more fuel is needed ... because until everyone realizes that the whole system has been ''manipulated'' by those that control ... nothing at all will change ... and all the violators will return to ''bau'' (business as usual) when the attention has been redirected to something else.
only when enough people actually feel the pain of these abuses will any real movement be made to correct their underlying causes.
Republicans are CROOKS - it''s not what they "do", it''s what they "are".
Posted by brianp55 at 03:13 PM : Oct 08, 2008
Imagine the $23,000 happy ending!
yes ... more fuel is needed ... because until everyone realizes that the whole system has been ''''manipulated'''' by those that control ... nothing at all will change ... and all the violators will return to ''''bau'''' (business as usual) when the attention has been redirected to something else.
Posted by bobnjersey at 03:06 PM : Oct 08, 2008
Right on.
Burn, baby, burn.
JUST ANOTHER CASE OF THE AVERAGE PERSON GETTING DUMPED ON. NO WONDER THE WORLD LAUGHS AT US.
------------------
WOW!
1. Any proof?
2. Are you talking about dollars or percentage of country''s wealth?
3. What about all of Russia''s wealth transferred to a few when communists took over?
And I thought welfare, and the like, constituted the greatest transfer of wealth -- from the working class to the unproductive. Certainly not a Bush priority.
Thank you.
Bear in mind that both candidates DID for for the $700 billion bailout ripoff. Under these circumstances, how could either candidate approach these people at AIG for taking the money of US taxpayers and squandering it on a spa?
I am, admittedly, not impresed with either Obama or McCain. I have repeatedly lit them both up here for voting for the bailout. But because one of them WILL be our next president, I''''d like to get a response from their soldiers here...
My vote is still up in the air. Why should I vote for either of them and what will your candidate do to keep these corporate theives from doing it again?
This is a genuine question... no BS.
Thanks for your time and thoughts.
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Posted by sincityq at 03:26 PM : Oct 08, 2008
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Neither one of these clowns deserve your vote. Choose for yourself, go to youtube, look up Ron Paul and the economy and you will get a surprise.
Also http://www.snopes.com/politics/business/easescredit.asp
The Dems don''t want you to know that THEY are to blame.
My vote is still up in the air. Why should I vote for either of them and what will your candidate do to keep these corporate theives from doing it again?..."
Boy, your thick.
Obama voted for the bailout, as did the rest of the Democrats, because if he hadn''t then the Republicans would have just blamed the stock market crash and coming depression on the Democrats - claiming that when Obama was given a chance to stop the depression, he didn''t. There''s enough stupid people out there that would have believed it so that the Republicans would have won.
But if you think for one minute that once the Democrats get into power that they are going to just let a Republican-designed 700 billion boondoggle just slide right through you are even stupider than your double-posting indicates.
Go to the Obama website and READ what he is planning to do to fix the economy, use your brains for a change instead of sitting on them.
I was raised by a die-hard Democrat. At 51 I''m just now realizing my Dad was right. Bush has made a believer out of me. My portfolio looked a lot better when Clinton was in office (even though he had the morals of a humpin rabbit). I''m taking a chance on Obama, even with the Muslim affiliation. We don''t need another 4 years with a Republican leader. Bush should go down as the worst president this nation has ever had.
By STEPHEN LABATON
Published: September 11, 2003
"The Bush administration today recommended the most significant regulatory overhaul in the housing finance industry since the savings and loan crisis a decade ago."
"Under the plan, disclosed at a Congressional hearing today, a new agency would be created within the Treasury Department to assume supervision of Fannie Mae and Freddie Mac, the government-sponsored companies that are the two largest players in the mortgage lending industry."
"The administration''s proposal, which was endorsed in large part today by Fannie Mae and Freddie Mac, would not repeal the significant government subsidies granted to the two companies. And it does not alter the implicit guarantee that Washington will bail the companies out if they run into financial difficulty; that perception enables them to issue debt at significantly lower rates than their competitors. Nor would it remove the companies'' exemptions from taxes and antifraud provisions of federal securities laws."
But it didn''t pass! And according to this, it sounds like they didn''t pay taxes. (I figured I better put in those quotes or I''d be just like Biden)
Posted by mellie1957 at 03:39 PM : Oct 08, 2008
You obviously weren''t investing in the NASDAQ...
yes - 1957 - brought up in a hard working family. Parents lived thru the great depression. It''s amazing how much smarter my parents got as I aged. I suspect history will repeat itself - we''ll be recycling aluminum foil in our kitchens, we''ll be hanging clothes on a clothes line to dry. I can do it because I''ve seen my mom do it. But our children are in for a culture shock when cable TV & cell phones get cut off. Happy 51st sincityq
"Well I''ve got news for you they''re going to get us anyway......so we might as well have a good time!
TOGA!! TOGA!! TOGA!! TOGA!!"
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