Fed reduces AIG's debt by $25 billion

Fed reduces AIG's debt by $25 billion

newsfeedresearcher.com

NEW YORK (CNNMoney.com) -- AIG announced Tuesday that it completed a deal wiping out $25 billion of its debt to taxpayers by selling stakes in two subsidiaries to the Federal Reserve Bank of New York. The troubled insurer gave the New York Fed preferred shares of two of its international life insurance companies, including $16 billion of American International Assurance Co. and $9 billion of American Life Insurance Co. The deal was originally announced in March. [5] The debt reduction is the result of a deal first announced last March to give the New York Fed a preferred stake in two of AIG's

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[edit on 2-12-2009 by TV_Nation]

This may seem like good news to some people but to me it is nothing impressive. This action by AIG does not result in the FED getting it's money it is just exchanging one asset for another and the shares the FED picked up are not cash.

The FED has to sell off this equity for at least 25bn and even then AIG still owes 62bn.

In my opinion this is just a move made by AIG to make it look like they are holding up their end of the bargain but in reality the taxpayers are still left with the 25 billion dollar debt until all of the equity is sold.


I guess there is a silver lining tho... the Federal Government is now AIG's biggest shareholder, ugghh!




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Originally posted by TV_Nation


This may seem like good news to some people but to me it is nothing impressive. This action by AIG does not result in the FED getting it's money it is just exchanging one asset for another and the shares the FED picked up are not cash.

The FED has to sell off this equity for at least 25bn and even then AIG still owes 62bn.

In my opinion this is just a move made by AIG to make it look like they are holding up their end of the bargain but in reality the taxpayers are still left with the 25 billion dollar debt until all of the equity is sold.


I guess there is a silver lining tho... the Federal Government is now AIG's biggest shareholder, ugghh!




newsfeedresearcher.com
(visit the link for the full news article)

You are correct, it's to appear that they are working with us. But in reality they are working with the Fed and govt. by obfuscating and hiding assets that would point to them being insolvent. And we won't get any of that 65 billion back.

Many people's hardship could be alleviated with that amount of money. Too bad ANY children suffer in the world.
Be that as it may, talk about over-leveraged! How swollen is the Fed's portfolio? Chump change I suppose.

The timing of this seems nefarious what with the dollar's global bludgeoning and all. Dunno, whatever man.

Originally posted by TV_Nation
I guess there is a silver lining tho... the Federal Government is now AIG's biggest shareholder, ugghh!

The Federal Government or the private Federal Reserve?
Again, this is not my area of expertise, but seems to me like these Reserve Banks took all the money now they want chunks of all the businesses as well.

Again though, finance is not my thing, so I could be wrong.

The Fed will get most, if not all, of the $16bn that is in preferred shares over AIA in Hong Kong. Its probably the best run part of AIG's group and remains well capitalised and profitable. The value in that company will ensure that it sells, or lists, at a reasonable price.

As for the rest of the AIG Group? Who knows...

My personal opinion is that the rest of the Group is worth less than the debt owed to the Fed/Treasury.

This is the problem with today's economy. Nothing has changed since Nov. 2008. Companies are even more indebted. The real question should be in assessing a companies value is their exposure to CDS, derivatives and the such. I think this will come back to roost. A lot of companies are worthless when you start to put those numbers on the ledgers.

I agree with the above posters this is all a shell game to make it look like they are recovering and playing by the rules when in fact they're 1 bad week on the market from another collapse.

This is nothing more than another scam. They aren't reducing their debt to the American taxpayers one bit, we're still left holding the bag. The Federal reserve bank of New York isn't going to sell off those assets and if they did they'd be taking a loss.....

Despite the government support, the company still faces a steep uphill battle to return to health. Shares of the insurer tumbled 15% Monday, after Bernstein Research analyst Todd Bault told investors that he cut the 12-month price target to $12 a share from $20 because the insurer's "loss reserves are significantly deficient again, much sooner than we would have forecast two years ago."

What good are assets from a company that is doing poorly and the price of it's shares are going down ?!

The Federal Bank of New York initially provided $85 billion worth of support to AIG in September 2008, when the company was on the brink of collapse. AIG's government rescue plan has since been restructured three times, and its total bailout is now worth up to $182 billion.

But much of that bailout has come in the form of government asset purchases that AIG does not need to repay. In addition to the $25 billion announced on Tuesday, the government in March bought up nearly $40 billion of insurance agreements and mortgage-backed securities held by AIG and its business partners.

To pay back the remaining $62 billion it owes the government, AIG will continue to sell off its assets. Despite recording two straight profitable quarters, AIG has said it will not generate enough earnings to repay taxpayers with profits alone.

They can't pay us back with their assets either because their assets are worth squat. The American tax payer will never be paid back, and the only ones benefitting from all of this is the federal reserve and the government.

Maybe what AIG should really be trying to give back to Americans are the jobs that they've cost us !

Edit for link .....

money.cnn.com...

[edit on 12/2/2009 by chise61]

Just another behind the door business world screw the common working man & woman deal to get out of what they owed after the fed used OUR tax money to bail out business world suit types.

And to top things off, they are still paying out milkions of dollars in bonueses

Keep the change!!

reply to post by chise61


I agree with everything you said as soon as I saw that the share value had been almost reduced by half recently I knew this had bullpoo written all over it.

Edit: Me no spell gud

[edit on 2-12-2009 by TV_Nation]

Life Insurance? LMAO! Insurance is one of the biggest scams in the history of humanity and it's one very powerful tool at keeping us all enslaved. It's one thing to sell off some REAL assets but to sell of branches of life insurance companies? My god!

It looks like AIG isn't the only one looking to pay off their debts.....

Bank of America Corp. said Wednesday it plans to repay its $45 billion in government bailout funds in the next few days, a move that will help the troubled bank recruit a new CEO.

This little tidbit may explain why..........

Treasury said that the $45 billion repayment will release the bank from pay restrictions even though Treasury still holds Bank of America warrants.

Seems that they're having a hard time getting a new CEO, I wonder how much of that can be attributed to the restrictions on pay that they now have to abide by. I think the main reason BOA wants to pay that debt off so fast is to release themselves from those pay restrictions, I wonder if that same reason has anything to do with AIG trying to get their debt reduced quickly also.

abcnews.go.com...

reply to post by TV_Nation

I guess there is a silver lining tho... the Federal Government is now AIG's biggest shareholder, ugghh!

Not really surprising when you consider this letter known fact about AIG:

They knew which factories to burn, which bridges to blow up, which cargo ships could be sunk in good conscience. They had pothole counts for roads used for invasion and head counts for city blocks marked for incineration.

They weren’t just secret agents. They were secret insurance agents. These undercover underwriters gave their World War II spymasters access to a global industry that both bankrolled and, ultimately, helped bring down Adolf Hitler’s Third Reich.

Newly declassified U.S. intelligence files tell the remarkable story of the ultra-secret Insurance Intelligence Unit, a component of the Office of Strategic Services, a forerunner of the CIA, and its elite counterintelligence branch X-2.

“This story is incredible because the unit begins as part of the desire of American [insurance] interests to contribute to the war effort and exploit it for future economic gain,” said historian Timothy Naftali, a consultant to the Nazi War Criminals Interagency Working Group that was created by Congress last year.

The men behind the insurance unit were OSS head William “Wild Bill” Donovan and California-born insurance magnate Cornelius V. Starr.

Starr had started out selling insurance to Chinese in Shanghai in 1919 and, over the next 50 years, would build what is now American International Group, one of the biggest insurance companies in the world. He was forced to move his operation to New York in 1939, when Japan invaded China.

Starr sent insurance agents into Asia and Europe even before the bombs stopped falling and built what eventually became AIG, which today has its world headquarters in the same downtown New York building where the tiny OSS unit toiled in the deepest secrecy.

slabbed.wordpress.com...

Originally posted by Zosynspiracy
Life Insurance? LMAO! Insurance is one of the biggest scams in the history of humanity and it's one very powerful tool at keeping us all enslaved. It's one thing to sell off some REAL assets but to sell of branches of life insurance companies? My god!

I'd really like to know why you think life insurance is a scam.

Originally posted by chise61

This is nothing more than another scam. They aren't reducing their debt to the American taxpayers one bit, we're still left holding the bag. The Federal reserve bank of New York isn't going to sell off those assets and if they did they'd be taking a loss.....

You're right that immediately it doesnt reduce the debt at all, it is just a transfer to a preferred interest from the line of credit.

However, the FRBNY will be paid most, if not all, of the $16bn in preferred interest they hold in the Hong Kong operation. Its not up to the FRBNY to sell assets to get repaid (as its preferred interest there are no voting rights for the FRBNY), it is up to AIG to sell off AIA Hong Kong, whether by direct sale or through a listing. Proceeds from that sale will then pay the FRBNY. The Asian business should sell for $15-20bn, barring a market collapse next year.

AIG has been segmented for good reasons. There are good parts of the business (ie the Asian operation), and there are terrible bits (ie many of the US operations, probably including the general insurance arm). There are willing buyers for the Asian bit as it is a very solid, profitable business.