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Transcript of AIG Scandal
- The AAA rating allows a bank to sell credit default swaps
-Only at a AAA rating (a company is allowed to do Credit Default swaps) when downgraded to AA in September 2008 this meant they had to pay back all the money owed from the credit default swaps
- They didn't have the money because they gambled it all on credit default swaps.
-This meant they had to liquidate their assets
-They still didn't have enough money so the Federal Reserve had to bail them out by buying 79.9% of the equity of AIG. AIG stands for American International Group , Inc. At the time it was the largest insurance company in the world and in 2011 on the Forbes 2000 list, it was named the 29th largest company in the world. It's Headquartered in New York City. -AIG was once the largest insurance company in the United States until its collapse in 2008
-Initially AIG was given a huge 85 billion dollar bailout by the federal government, however despite this massive bailout losses continued and the rescue packages kept coming eventually amounting to 182 billion dollars
- Shockingly in March of 2009 just two days before the bailout AIG gave 165 million dollar raises to its executives who were responcible for AIG demise The Truth Revealed REINSURANCE Insurance for insurance companies
Reinsurance company -> Insurance company -> Customer FINITE INSURANCE Limited period, very high premium
If there is no claim, insurer returns premium AIG today -In September 2012 the treasury sold 20.7 billion dollars of its shares
-This means that the treasury now only owns 15.9% of the company. In April of 2011 the government owned 92% of the company
-The treasury also announced that they recovered 197.4 billion dollars from the 182 billion they invested for the AIG bailout
-In November AIG announced its third quarter sales; they made a net profit of $1.9 billion, they year before they reported a loss of $4 billion
-Its stock price ON 12/5/12 is $33.78 a share corporate joke Whats the difference between an AIG executive and a drunken Irishmen ? A Drunken Irishmen spends his own money ! nytimes.com www.thenation.com/article www.googlefinance.com www.jokes4us.com/AIG