Sunday, December 20, 2009, 5:27PM ET - U.S. Markets Closed.

Black Hole AIG Needs Another $10 Billion

Posted Dec 10, 2008 09:02am EST by Joseph Weisenthal in Investing, Newsmakers, Recession

From ClusterStock, Dec. 10, 2008:

After all the money AIG's had shoveled at it, why does it need another $10 billion? Because, as the Wall Street Journal reports, the money its gotten from the government are supposed to pay off its bad CDS bets -- essentially, the money went to retiring the underlying CDO --- but it's also stuck $10 billion on what were just bad bets, not necessarily designed to help clients manage risk.

The $10 billion in other IOUs stems from market wagers that weren't contracts to protect securities held by banks or other investors against default. Rather, they are from AIG's exposures to speculative investments, which were essentially bets on the performance of bundles of derivatives linked to subprime mortgages, commercial real-estate bonds and corporate bonds.

These bets aren't covered by the pool to buy troubled securities, and many of these bets have lost value during the past few weeks, triggering more collateral calls from its counterparties. Some of AIG's speculative bets were tied to a group of collateralized debt obligations named "Abacus," created by Goldman Sachs.

Go to Tech Ticker
216 votes|Recommend this

405 Comments

Yahoo! Finance User
Yahoo! Finance User - Wednesday December 10, 2008 09:13AM EST

Of course they do the crooks they are. SCREW EM!!!!!!!!!!!!!

mike
mike - Wednesday December 10, 2008 09:15AM EST

Thank you very much Federal Govt. Why not give them more of our tax money to AIG so they could go now party in outer space.

odd s
odd s - Wednesday December 10, 2008 09:20AM EST

These guys are turning out ot be the biggest joke going. The once "mighty" aig who ran roughshod over the market and sometimes their own clients now is sneaking around with their tin cup asking for charity. Close them down and let the market forces work. AI WE, we own em'. odd

__A_YAHOO_USER__
__A_YAHOO_USER__ - Wednesday December 10, 2008 09:20AM EST

No comments : either I like it or not it will be done........By Grandmaster Paulson.......sorry, I am novice and no chance........my move is futile ..........The name of the Moves is AIG variation...I am out-date in this Chess Book.......

__A_YAHOO_USER__
__A_YAHOO_USER__ - Wednesday December 10, 2008 09:21AM EST

when you have business all over the world, that basically isnt allowed to fail, what is the risk in making high beta bets on stuff you dont understand?!! no risk whatsoever....lesson kiddies: get your loved ones in one of these "NEEDED" companies!

consumer 1
consumer 1 - Wednesday December 10, 2008 09:24AM EST

Let`s bailout the auto makers instead.AIG already had there chance.!

SKC
SKC - Wednesday December 10, 2008 09:27AM EST

More to come from AIG FP, United Guaranty losses, and subprime lending unit.

Gerhard
Gerhard - Wednesday December 10, 2008 09:34AM EST

I think most people miss the point about the TARP. What the government is doing is injecting liquidity into financial institutions so it doesn't have to take them over. Believe me, if you think AIG is bad now, wait till you dump it on the feds to run. Afterall, AIG is just losing billions, our government is well on the path to losing trillions.

Reedersong
Reedersong - Wednesday December 10, 2008 09:34AM EST

hey, guess what? Same headline 2 months from now, replace AIG with Auto Industry.

Raymond
Raymond - Wednesday December 10, 2008 09:36AM EST

WE give these crooks 100 billion and we can't give the auto industry who are just "stupid" 34 billion. Go figure

jacksonian
jacksonian - Wednesday December 10, 2008 09:37AM EST

Instead of throwing more dollars into the trash, why not just give every tax paying American 25,000 or 50,000 and let us take it from there. Cheaper and easier and a heck of a lot more affective.

ANTHONY
ANTHONY - Wednesday December 10, 2008 09:38AM EST

I WONDER IF "GOVERNMENT OVERSIGHT"GAVE WALLSTREET,, A "DYSON"OR A "HOOVER"TO SUCK UP ALL THE MONEY,,OR WAS MORE LIKE A 3 LANE ROAD "VACUUM" CLEANER,,OR AN INDUSTRIAL "SUPER SUCKER"...... 2 TERMS AND DISAPPEAR ,,,,,,,,,TTOAD.. OVERSIGHT MY ASS

NicholasM
NicholasM - Wednesday December 10, 2008 09:45AM EST

Here is another perfect example of how our government works. Money is handed out with zero oversight and look what happens. This is why these bailouts are insane. The people in charge of taxpayer money are proving they really are incompetent and they still get elected back into office over and over again. I would love to hear from people that voted for Pelosi, Reid, Frank and Dodd as to why they keep voting for these losers? There has to be some reason that escapes me? They give away $350B to people that have no regard for taxpayer concerns and spend it to enrich themselves instead of taxpayer protection. Are there any Pelosi, Reid, Frank, and Dodd advocates out there? Let's hear what you have to say? Let's hear why you think these people are doing the right thing for America? Send in your comments.

QUINTO
QUINTO - Wednesday December 10, 2008 09:46AM EST

AIG IS DISGUSTING. We spend an inordinate amount of time roasting the Auto Executives over a mere 15 Billion and these "Carpet Baggers" form AIG just keep putting their hands out for more. The Gov't. should just take over this inept organization and replace the entire executive level of management. This is SINFUL!!!

Yahoo! Finance User
Yahoo! Finance User - Wednesday December 10, 2008 09:49AM EST

Serves them right! One of the motorists they insured ran into me 2 years ago and AIG refused to pay my claim! Instead they tied it up on court for 2 years. I guess Kharma really does work...

Zhili
Zhili - Wednesday December 10, 2008 09:52AM EST

enough is enough!!!! we should demand immediate liquidation of the s**t hole to repay whatever leftover back to the taxpayers. don't throw the good money after the bad money. this is outrageous and sad....this is beyond words. folks... if they want the money. their CEO should drive their cars to the capitol hill (if on private jet first time, and should go back and drive their own car the second time) and go through all the ordeal the big 3 CEO went through, begging for the money in national TV and let everyone see who these crooks are...

Reedersong
Reedersong - Wednesday December 10, 2008 09:57AM EST

Oil above $44 as investors anticipate OPEC cut-Article Headline. Let them speculate and cut all they want....gas stations will close down next year.

Carl
Carl - Wednesday December 10, 2008 09:57AM EST

all the blokes need is another 10 B? this is all turning into a witch hunt for US taxpayers dollars Let em fend for themselves. Glad they paid what debt they could but they need to stand toe to toe with the market with their own decisions...............................

Marc
Marc - Wednesday December 10, 2008 09:57AM EST

Saving AIG was about saving Goldman and its cohorts. don't kid yourself that it was anything but that.

maicaray
maicaray - Wednesday December 10, 2008 10:00AM EST

No one, I repeat no one understands the situation. Not Paulson, not even Obama. We are headed down a dark, deep and depressing hole my friends. History will tell us that the Free Markets should have been allowed to work. What Congress is allowing will spell disaster.

Yahoo! reserves the right to refuse, or remove any comment that does not comply with the Yahoo! Terms of Service. The submission of spam, hateful, or obscene messages may result in the termination of your Yahoo! ID.
About Tech Ticker - Send FeedbackDisclaimer. Copyright © 2007 Yahoo! Inc. All rights reserved.
Copyright/IP Policy - Terms of Service - Privacy Policy - Help
Quotes delayed, except where indicated otherwise. Delay times are 15 mins for NASDAQ, NYSE and Amex. See also delay times for other exchanges.

Quotes and other information supplied by independent providers identified on the Yahoo! Finance partner page. Quotes are updated automatically, but will be turned off after 25 minutes of inactivity. Quotes are delayed at least 15 minutes for NASDAQ, NYSE and Amex. See also delay times for other exchanges. Real-Time continuous streaming quotes are available through our premium service. You may turn streaming quotes on or off. Fundamental company data provided by Capital IQ. Financials data provided by Edgar Online. Historical chart data and daily updates provided by Commodity Systems, Inc. (CSI). International historical chart data, daily updates, fund summary, fund performance, dividend data and Morningstar Index data provided by Morningstar, Inc. Analyst estimates data provided by Thomson Financial Network. All data provided by Thomson Financial Network is based solely upon research information provided by third party analysts. Yahoo! has not reviewed, and in no way endorses the validity of such data. Yahoo! and ThomsonFN shall not be liable for any actions taken in reliance thereon. All information provided "as is" for informational purposes only, not intended for trading purposes or advice. Neither Yahoo! nor any of independent providers is liable for any informational errors, incompleteness, or delays, or for any actions taken in reliance on information contained herein. By accessing the Yahoo! site, you agree not to redistribute the information found therein.