AIG Bailout

[roadwarrior]

Well, after saying they wouldn't do it, they did to the tune of $85B:

http://www.foxnews.com/story/0,2933,423785,00.html

[Hookemdown.]

Does anyone know how this might affect the AIG stock prices?

[Simp]

Does anyone know how this might affect the AIG stock prices?

I don't know but they better stop running all their commercials! I mean serouisly we could have a world class universal helthcare plan for what we may end up paying to bail these companies out.

[CRFisher]

This might actually not cost the govt that much by the end of the day, or in this case the two years.  Asset wise, AIG seems solid, just no liquidity.

[Hookemdown.]

AIG just fell to 2.60 a share.  30% drop after hours.

[tyrius.]

Does anyone know how this might affect the AIG stock prices?

Should absolutely destroy the price.  From what I've read the gov't is taking an almost 80% stake.  That means the rest of the stock owners now only own 20%.  

[tyrius.]

Well, after saying they wouldn't do it, they did to the tune of $85B:

http://www.foxnews.com/story/0,2933,423785,00.html

Stupid

[burleytog]

Not to be a PITA or anything, but wouldn't this be considered a political post/thread?  :-X

[South FLA]

AIG Stock Price

Sept., 2007 = $69.xx

Today it closed at $3.95, Ouch!

Read this article and it should take some of the politics out of it:

http://www.investopedia.com/articles/07/subprime-blame.asp

[Redlinerobert]

Not to be a PITA or anything, but wouldn't this be considered a political post/thread? :-X

Political no, economy/finance yes.

We have an interesting year ahead of us.

[Sam]

A.M. Best rates all insurance companies.  Here is what A.M. Best says:

OLDWICK, N.J., SEPTEMBER 15, 2008

A.M. Best Co. has downgraded the financial strength rating (FSR) to A (Excellent) from A+ (Superior) and issuer credit ratings (ICR) to "a" from "aa" of the domestic life and retirement services subsidiaries of American International Group, Inc. (AIG).

In addition, A.M. Best has downgraded the FSRs to A (Excellent) from A+ (Superior) and ICRs to "a" from "aa-" of AIG's domestic property/casualty subsidiaries. A.M. Best also has downgraded the FSRs to A (Excellent) from A+ (Superior) and ICRs to "a" from "aa-" of the subsidiaries of AIG's 60% majority owned company, Transatlantic Holdings, Inc. (New York).

Concurrently, A.M. Best has downgraded the ICR to "bbb" from "a+" of American International Group, Inc. (New York, NY) [NYSE: AIG]. Additionally, A.M. Best has downgraded all debt ratings of Transatlantic Holdings, Inc. and downgraded the FSR to A (Excellent) from A+ (Superior) and ICRs to "a" from "aa" of the Hartford Steam Boiler Group (Connecticut).

At the same time, A.M. Best has downgraded the FSRs to A (Excellent) from A+ (Superior) and ICRs to "a" from "aa-" of the Personal Lines Pool and operating subsidiaries of 21st Century Insurance Group. A.M. Best also has downgraded the ICR to "bbb" from "a-" and debt ratings of 21st Century Insurance Group. All ratings have been placed under review with negative implications. (See link below for a detailed listing of the companies and ratings.)

These rating actions are based on the rapid deterioration of the already existing fragile condition of AIG's financial strength and flexibility. Specifically, AIG's lack of liquidity at the holding company level and management's need to secure funding options are not representative of financial stability and not reflective of AIG's current ratings.

AIG's ratings and under review status will be reviewed as AIG executes its plans to stabilize its financial condition. A.M. Best will need to review the $20 billion proposed subsidiary asset internal funding mechanism and its impact on the specific subsidiaries.

AIG has been without an approved shelf registration since capital was raised in May of this year. Bank facilities have been utilized with the issuance of commercial paper. The rating actions consider the potential for additional liquidity from unanticipated internal and external sources.

[moby bass]

Hmmmm, Government owns 80% of AIG.... that should just about finish that company off.  

[Glenn]

I understand your concern Burley.  Since the gov't is a part of this topic, it COULD be taken as political, but this is about economics - primarily the stock value of a company.

Now if this thread turned into a discussion about gov't policies regarding the economy, THEN it would be political.

[avid]

Somebody 'splain to me how these HUGE banks and brokerage houses, and their major insurers failed to notice that hundreds of billions of dollars were being loaned to homebuyers who couldn't possibly afford it?

[avid]

Interesting point of view on the necessity for all these bailouts.  

It's one sided of course, but imagine what would happen to our economy if China took such severe losses that the decided to dump US dollars.

http://articles.moneycentral.msn.com/Investing/JubaksJournal/feds-bailed-out-china-not-the-us.aspx'>

http://articles.moneycentral.msn.com/Investing/JubaksJournal/feds-bailed-out-china-not-the-us.aspx

[moby bass]

Somebody 'splain to me how these HUGE banks and brokerage houses, and their major insurers failed to notice that hundreds of billions of dollars were being loaned to homebuyers who couldn't possibly afford it?

Low interest rates= cheap money.  A great rush to prime the economy.

I'm sure they were well aware of the many questionable loans that were being made but with the government at the ready with taxpayer dollars to bail them out if necessary, where's the risk on the part of the banks? A lot of people were counting on the continuing increase in value of homes.  More people buying pushes prices up.  Very much like the run up in the stock market before the crash of '29. Prices are overvalued and a whole lot of people playing with money that wasn't theirs to play with.

[tyrius.]

Somebody 'splain to me how these HUGE banks and brokerage houses, and their major insurers failed to notice that hundreds of billions of dollars were being loaned to homebuyers who couldn't possibly afford it?

The same thing that caused those same groups of people to lose billions of dollars in the * rise and fall.  The herd mentality is strong in humans and when one group is making tons of money other groups quickly follow until they overbuy and then it crashes.  This will happen again in the next few years.  It's not a matter of it, it's a matter of where.

[Siebert Outdoors]

Somebody 'splain to me how these HUGE banks and brokerage houses, and their major insurers failed to notice that hundreds of billions of dollars were being loaned to homebuyers who couldn't possibly afford it?

I'm with avid on this.  Businesses go out of business for mostly one reason.  Bad management.  Why is the government bailing out these businesses.  I honestly dont understand.  The put the housing industry pretty much where it is IMO for bad loans so dont they deserve to go out.  Someone will step in and take up the slack.

I guess I'm tired of seeing bad business being saved by my money.

[roadwarrior]

The AIG top management has been fired as well as those running Fannie and Freddie. Additionally, severance bonuses have been eliminated. In all instances, shareholers have been virtually wiped-out.

The companies are not being "saved", the attempt is to have an oderly transition of assets and services from these entities to others. If these companies "survive" it will be in name only, ownership will be transferred to other parties.

[rondef]

The really sad thing about this is the millions of dollars these CEO & CFO were paid to drive the company into the toilet.

[roadwarrior]

The really sad thing about this is the millions of dollars these CEO & CFO were paid to drive the company into the toilet.

Well, that money won't be recovered, but if it's any consolation, a high percentage of their compensation was in restricted stock which is now worthless!

[done]

Just par for the course. I mean look at Carly (from HP) She ran that company into the ground and got fired. Then gets $40 million in severance for failing to perform in almost every way a CEO can be measured.

[Avalonjohn44]

The government keeps bailing these companies out, and the march toward socialism continues... When do we petition to join the European Union?

[Hookemdown.]

I'm glad they bailed AIG out.  Cramer (financial guy) was practically predicting the collapse of the world economy without the buyout.

[Avalonjohn44]

Jim Cramer, CNBC?