Sunday, March 15, 2009

AIG's "systemic risk" document

Since AIG is in the news with more bonuses again, it would behoove us to look at the AIG "leaked" confidential document, where AIG declares that their failure would be systemic to the financial system.

That document is here.

In it, they talk about the potential unemployment costs of AIG's workers; workers it seems they have to continually bonus!

And they warn us about the cost of AIG's insurance obligations to main street.

How is it then, that none of the bailout money was needed for it's insurance business?

On page 18, we see that the European banks had only about $10 billion of regulatory capital exposure if AIG went down, so where did the the rest of the money go?

Why is it that AIG will let the market see it's scare tactics, but it doesn't let the market see the counterparties exposure that they had or have had with them?

And finally, AIG warns us that if it fails, our "TARP" investment would go down.

Yes the "TARP" investment that prevents AIG from bankruptcy, but doesn't prevent it from paying bonuses!