Wall Street Manna

An irreverent look at Wall Street

Monday, February 23, 2009

AIG threatens the Government with a bankruptcy filing


AIG is going to have a $60 billion quarterly loss, and now needs money again from the taxpayer. AIG needs the money so badly, they hired Weil, Gotshal & Manges LLP to "prepare" a bankruptcy filing if they can't extort any more money from the Government-which is you!

So now we see, that $150 billion for AIG isn't enough! Let them put AIG's financial products business in bankruptcy. Why else do we get AIG sympathy pieces like the one in the Washington Post this weekend regarding AIG's Financial Products divison, that blew up over $100 billion dollars. Even then, the AIG workers were wondering-"What's in it for me?"

In recent years, Financial Products wrote a series of private contracts that faltered and came back to haunt its parent company in a very public way, leaving the insurance giant on the brink of collapse. Fearing that the failure of AIG could send shock waves throughout the financial system, the federal government stepped in last September with the single largest bailout of a company in U.S. history, a total rescue package of up to $152 billion...

"In a situation like this, it's hard to keep everybody on task, motivated, focused. People know they are going to be out of jobs," Pasciucco said. "So they are constantly doing that calculus in their heads, as to what's left in terms of what I get paid here? What can I get paid in a new career? When should I start my new career?" Haas, the Financial Products veteran, said no one at the firm is looking for sympathy. "The whole world hurts right now," he said. But he said the vast majority of current employees had no role in the problems that wrecked the firm, and many feel a measure of shame and guilt for how its troubles spread to AIG and helped poison the economy.

"People have great pride in this organization. Everyone is horrified at what happened," he said, adding they are determined to close down the firm with dignity and professionalism. "There's a duty. We owe it to AIG. And now we owe it to the government and the taxpayer."

These days, Haas avoids telling people where he works. But he and the others who remain still show up each week at the office park off Danbury Road. They keep framed pictures of smiling children on their desks. Letizia's Pizza in Norwalk still delivers each night to those who stay late, chipping away at the pieces of Financial Products until it is finally gone.

"The great irony in it," Haas says, "is the better job we do, the sooner we'll be out of a job."
http://www.washingtonpost.com/wp-dyn/content/article/2009/02/20/AR2009022003304_4.html

Citigroup is also going back to the Fed for aid for the third time, showing that they too, understand the AIG model.
http://aaronandmoses.blogspot.com/2009/02/aig-model-for-insolvent-institution.html

Ken Lewis of BAC, said they wouldn't need to go back to the Fed, as two times was supposedly enough for them. There was whispers on the street that the traders at Merrill had made a couple billion so far this year, and Ken said business for January was good.

We'll see.

I think Ken Lewis understands the AIG model, and he'll be back!

Just like AIG, and just like Citi!

Until they're terminated!

2 Comments:

At February 23, 2009 at 9:09 PM , Anonymous Anonymous said...

At this point the government is effectively throwing "good money after bad" with AIG. Whose to say that it won't go bankrupt anyway? Do you know of anyone pining to buy insurance from AIG? I would be curious to know what new business is. To learn more go to www.newyorkshockexchange.com

 
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