Since I am bored, and since nobody at the gov level seems to understand what is going on here it is:
I was the biggest bear on AIG for the last 2 years simply bc without the gov backstop, AIG was/is insolvent. I never thought the treas/fed would like it come to this and would have shut down the company before the fireworks, but they obviously can't see how the company, and their entire stake is being swept out from under them.
There is a lawsuit, Murray v. Geithner that began in Dec 2008 challening the legaility of the AIG bailout bc AIG is the biggest provider of Sharia Insurance. Bc of this, and the fact that the gov owns currently 77.9% of the stock through the series C pref, the bailout was/is illegal bc it violates the first ammendment, establishment of reiligion, bc of their Sharia operations. the case has been in summary judgement since June 7. It was in the course of discovery that the plantiffs realized that the Trust that was set up to hold the 77.9% of AIG series C pref was illegal bc the beneficiary of the Trust was no other than the trea dept itself, and in order to be a trust, the beneficiary has to be a person or entity, which is clearly not the case. From what I researched, The fed/treas knew what they were doing was illegal in Sept 2008 by taking control of AIG, but they did it anyways. On march 9th of this year, the fed was subpoened as part of the discovery process, and it is my belief that in this testimony, it was admitted that the trust was illegal. go back to mar 9th, look at the volume and price jump. the closed testimony began at 9 and ended at 12 and you will see the price spike began around 12:30 so somebody was tipping Berkowitz about what was said.
Ok, so what you are seeing now, is that if the trust is illegal, the Treas does not own 77.9% of the company. If that is the case, they have no right to vote the current recap plan into effect. Therefore, Berk is trying to take control of the stock to overrule the massive dillution that gives the gov 1.655 billion shares. If that happens, the gov/fed/treas is screwed bc the series E and F that they now own is worthless. it pays no div, has no voting rights, and is no traded. it essentially has no value. It was in march of 2009 that our brillaint fed/treas cut a deal with AIG to eliminate the div, making the stake worth nothing, and it is bc of this that we as taxpayers may lose our entire AIG stake for the benefit of the AIG shareholders. if this plan goes through like Berkowitz is betting on, AIG stock may well be worth 200 a share bc there will only be 150 million shares out, giving the company 30 billion value.
the gov had many reasons and opportunities to avoid this, shut down this comapny but they got duped. bc of their greedy ways, they tried to spin AIG like a success story before the elections in Nov, not realizing the only reason the stock was rising was simply bc of what Berkowitz agenda is. he is only one buying the stock, and he might turn out to be the person who destroyed all faith in the fed/treas if this plan goes through.
<How much were Lehman and Bear Stearns bonuses for 2007?
<<Of course there are always some exceptions....
GS and most of the other big financial institutions have been giving out bonuses over the last 30-40 years.
These big institutions rule the financial markets.
"how can the financial institutions give millions of dollars as bonuses to its employees"
Well, we saw in 2006 & 2007,billions of dllars in bonuses handed out to people who were in e process of destroying their institutions and the economy because the price of the assets they originated were slightly higher than what the banks pad forthem, TEMPORARILY. How much were Lehman and Bear Stearns bonuses for 2007?
I don't agree to your point. If that was the case how can the financial institutions give millions of dollars as bonuses to its employees....
Even with AIG, I bet most of the institutions knew about the yesterday's news that more than 30 banks invest in AIG, as these were handled again by big banks. We small investors depend upon the charts, daily news, volume and earnings report only.
IMO, most of the institutions most of the times know more than us and much earlier than us (individuals). Of course there are always some exceptions....
Institutions are buying these stocks and they know why they are buying.
Very few individuals are investing in this stock.
AIMO, Please do your own RESEARCH!
I personally think AIG will go up and that was even confirmed recently as the PPS went up with huge volume when more than 30 banks believe in the future prospects of AIG.
There are some reports that indicate even the insiders are buying AIG shares.
this week the upward trend may be because an opinion on this is soon to be released:
"if this plan goes through like Berkowitz is betting on, AIG stock may well be worth 200 a share bc there will only be 150 million shares out, giving the company 30 billion value. "
it would be worth a lot more than 200 a share. right not the estimate is about 55 a share, with gov't owning 80% of the stock via the warrants. Take away the warrants, then that 55 per share has to be based on the commons owning 100% of the common stock, not 20%. so right away you're talking 55 *5 or about 275. That's for starters, then you take away the billions of dollars (what was it $180B) that the gov't paid AIG that the gov't may not be able to get back, and instantly AIG is worth $180B more than it was. So the 275 is the start of the rocket upwards.
this might even make a little sense, IF the govt forfeited its entire investment in aig. but that won't happen.
the trust might (might) be found to have been incorrectly established, but the loan/investment of the govt to aig is a reality, and the court will direct the parties to find an equitable solution.
this theory might have some intrinsic merit and might make a good Hollywood movie. To be sure, I am long this stock and a surge in value to $200 or so would make me really rich. Honestly though I don't see courts easily throwing out the window tons of taxpayer money based on mere technicalities. Courts look at more than technicalities. Think of the public rage or even some social unrest that might follow. As a recent example on how courts rule, it comes to mind the US seante election in Alaska where courts interpreted the INTENTION of the voter rather then the misspelling of the name on the ballot bulletin - which would, technically speaking, have invalidated a misspelled vote.
Good thoughts but there can be other reasons. The gov't gave consideration for the bailout $ and received the shares in return. Even if the trust is deemed illegal, US equitable priciples will make the gov't whole by making AIG return the money - i.e., AIG still owes money to Uncle Sam.
I don't want to speak for the author of this thread...but would the courts order AIG to make the US whole on "equity principles" if the US engaged in an illegal activity (setting up an unlawful trust)?