U.S. Lays Out AIG Exit Plan

DECEMBER 8, 2010
U.S. Lays Out AIG Exit Plan
Treasury Looking to Unload $15 Billion of Its Shares in First Quarter of 2011
By SERENA NG And ERIK HOLM
Wall Street Journal

American International Group Inc. on Wednesday entered into an agreement with the U.S. government that details, among other things, the rights the Treasury Department will have as it begins to sell its controlling stake in an accelerated exit plan.

The Treasury is aiming to sell at least $15 billion of its shares in the giant insurer in the first of a series of stock offerings starting in the first quarter of 2011, people familiar with the matter said.

Executing the share sales, which are expected to total over $60 billion over two years, will involve a careful balancing act that aims to disentangle the government from the company without destabilizing it. While Treasury wants to exit its ownership as quickly as possible, it doesn't want to get in the way if AIG needs to buttress its capital position or that of its insurance subsidiaries by selling shares.

Under the agreement released on Wednesday, the government will essentially be able to dictate the terms and frequency of AIG share sales until U.S. ownership drops below 33%...

"Client 9": The Eliot Spitzer case: How we were bamboozled

Did AIG, the insurance company that got over $100 billion in bailouts, play a role in bringing down Eliot Spitzer?

Nov 3, 2010
"Client 9": The Eliot Spitzer case: How we were bamboozled
An intriguing new movie dissects the thicket of money, lies and rumors around the governor's downfall
By Andrew O'Hehir

Perhaps you've noticed this lately: It's remarkably easy to distract people from substantive issues by telling them entertaining stories, whether or not they bear any relationship to the truth. (E.g.: "The Muslim socialist raised your taxes!" may be a lie from beginning to end, but it has a lot more narrative appeal than "We're the people who let the bankers steal your grandkids' money, and we'd like to do it some more.")

Unfortunately for former New York Gov. Eliot Spitzer, the stories his enemies got to tell about him were true, at least in part. But the fact that Spitzer must take the blame for his own misdeeds -- and for his hypocrisy -- should not obscure the more important fact that the media and the public got fatefully bamboozled by the Spitzer story. "Politician caught with pants down" and "White knight has feet of clay" are stories we're all drawn to, almost by primal instinct. They satisfyingly confirm all our worst suspicions about human nature. But that primal satisfaction was used, in this case, to distract our attention from the takedown of one of the few American politicians devoted to fighting corporate power and ruling-class privilege, an act that in retrospect looks an awful lot like a political assassination...

As irresistible as the Ashley and Angelina material may be, that stuff is really the icing on Gibney's cake, which is an elegantly told New York fable about a smart, arrogant guy who made a whole lot of the wrong kinds of enemies. "Client 9" builds a forceful, if circumstantial, case around the disclosures that led to Spitzer's downfall. Avowed Spitzer haters like investment banker Ken Langone, former AIG CEO Hank Greenberg and ex-New York Stock Exchange head Dick Grasso were clearly seeking any opportunity to take the governor down, and Langone has made murky comments to the effect that he knew about the prostitution scandal before the news broke. (See, a friend of his was in line behind Spitzer at the post office ... No, really.)

Notorious right-wing political trickster Roger Stone has claimed to be the initial source who told the FBI about Spitzer's dalliances with hookers (and he's definitely the source of the scurrilous knee-socks allegation). Although Stone was an aide and confidante to state Sen. Joe Bruno, one of Spitzer's biggest Albany foes, Stone says he heard about the whole thing on his own, at random, from a hooker in a Miami nightclub. (Given Stone's background and reputation, that part of the story is strangely believable.) Add up all these billionaires, rogues and past and future indictees -- along with a scandal-plagued Justice Department at the tail end of the George W. Bush era, eager to claim the scalp of a leading Democrat -- and the whole thing looks overdetermined, as the Marxists say.

NY Fed Told AIG to Limit Details of Bank Payments

Apparently AIG's creditors, apart from banks, were small enough to let them fail, and keep the deals secret.

JANUARY 7, 2010
NY Fed Told AIG to Limit Details of Bank Payments
By ALISTAIR BARR

The Federal Reserve Bank of New York told American International Group to withhold details from the public about more than $62 billion the insurer paid to banks at the height of the 2008 financial crisis, according to emails disclosed on Thursday by congressman Darrell Issa (R., Calif.).

AIG said in a draft of a regulatory filing that it paid banks including Goldman Sachs Group and Société Genéralé 100 cents on the dollar for credit-default swaps they bought from the insurer's derivatives unit AIG Financial Products.

The swaps were sold as protection against defaults on complex mortgage-related vehicles known as collateralized debt obligations, or CDOs. As the housing meltdown grew into a full-blown financial crisis, AIG was forced to post billions of dollars in collateral on these contracts, pushing it to the brink of collapse.

The insurer was saved by the federal government, which committed more than $100 billion in taxpayer money to the bailout. A lot of that money was quickly transferred to major banks that were counterparties on the CDO-linked derivatives.

The bailout has been among the most controversial of the financial crisis because the banks were paid 100 cents on the dollar during a period when many similar obligations were being settled at large discounts...

SEC: Ex-AIG CEO Greenberg settles fraud charges
AP

By STEPHEN BERNARD, AP Business Writer Stephen Bernard, Ap Business Writer

August 6, 2009

NEW YORK – The Securities and Exchange Commission said Thursday that former American International Group Inc. CEO Maurice "Hank" Greenberg agreed to pay a $15 million fine to settle fraud charges.

The charges are tied to an accounting scandal earlier this decade at AIG that led to Greenberg's ouster in 2005. The following year, AIG paid more than $1.6 billion to settle charges of improper accounting.

The case is unrelated to the government bailout of AIG, which is in the process of trying to sell off assets to pay off the $182.5 billion in loans it has received since last September.

A spokesman for Greenberg was not immediately available to comment. An AIG spokesman declined to comment.

The SEC said AIG's former chief financial officer, Howard Smith, will pay a $1.5 million fine tied to the investigation.

In complaints against Greenberg and Smith, the SEC said the pair were responsible for making misstatements that falsely showed AIG met or exceeded earnings and growth targets between 2000 and 2005. The pair did not admit or deny any wrongdoing as part of the settlement.

Greenberg was forced out of AIG after charges that the company had engaged in deceptive accounting practices surfaced.

Greenberg, who built AIG over his 35-year career from a small company into the world's largest insurer, have been fighting in court in an unrelated case over who controls an employee retirement fund. AIG had accused Greenberg of plundering the AIG retirement program composed of $4.3 billion in stock through a company called Starr International Co. that Greenberg controls. A jury last month sided with Greenberg in the civil case saying he did not have to reimburse AIG for the stock, but the decision was only an advisory recommendation.

The judge hearing the case will make a final ruling on who controls the fund, and its purpose, by the end of the month. This case is also unrelated to the insurer's bailout by the government.

AIG is currently in the middle of a major overhaul as it looks to repay the government for the loans it received to avoid collapsing last fall at the peak of the credit crisis. In return for the loan package, which is worth up to $182.5 billion, the government received about an 80 percent stake in the insurance giant.

Insurance companies alone have pocketed $600 million in excessive profits in Iraq

Insurance companies alone have pocketed $600 million in excessive profits
over the past five years, says a staff report from the House Oversight and
Government Reform Committee, but the Defense Department refuses to
adjust its approach for managing the program.

The Wars Come Home

A poorly run Pentagon program for providing workman's compensation for
civilian taxpayers, a House oversight committee said Thursday.

Insurance companies alone have pocketed $600 million in excessive profits
over the past five years, says a staff report from the House Oversight and
Government Reform Committee, but the Defense Department refuses to
adjust its approach for managing the program.

According to the committee, the Pentagon allows its contractors to
negotiate their own insurance contracts. By contrast, the State Department,
U.S. Agency for International Development and the Army Corps of Engineers
have all selected a single insurance carrier to provide the insurance at
fixed rates.

"What makes the situation even worse is the people this program is
supposed to benefit - the injured employees working for contractors -
have to fight the insurance companies to get their benefits,"
committee Chairman Henry Waxman, D-Calif., said at a hearing
Thursday. "Delays and denials in paying claims are the rule."

KBR Inc., one of the largest defense contractors in Iraq, paid the insurance
giant AIG $284 million for medical and disability coverage under the Defense
Base Act, a reference to the federal law mandating the insurance. Due to
the way KBR's contract is structured, this premium, along with an $8 million
markup for KBR, gets billed to the taxpayer.

"Out of this amount, just $73 million actually goes to injured contractors, and
AIG and KBR pocket over $100 million as profit," Waxman said.

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