Remember when the Republicans insisted this was going to be a money making venture? They were laughing and counting the profits. Money making in terms of bonuses, perhaps, but in terms of capitalism and customer revenue, not so much. Those Republicans are the same ones hiding from their responsibilities today and offering nothing other than obstruction. Don’t worry though because CNBC’s Rick Santelli is surely preparing a massive online protest where he will try and do better than the dozens of new fans he rallied to protest rewarding bad behavior. If anyone would understand the value of providing billions more in addition to the $150 billion already handed over to AIG – a single company – it will be Santelli. The report from CNBC is that they will announce an additional $60 billion in write-downs. Yes, $60 BILLION!
The Obama homeowner bailout plan is a $50 billion dollar plan, or $10 billion less than AIG is about to announce is gone. For those in the GOP and at CNBC struggling with math, that would be one third of the value of what the US government has already paid to AIG to keep them afloat with shiny offices, “retention bonuses” and other bonuses plus well paying jobs and benefits. None of this even touches the numerous rate cuts that the Fed delivered to help out the traders that so adore Santelli. That free money should also be considered a bonus to traders not to mention a violation of capitalism. Let’s face it, Santelli and his trader friends are a bunch of good-for-nothing pinko commies, but we already knew that.
This AIG loss might be the ugliest loss so far in this crisis but remember, as Roubini says we are only in the third or fourth inning of this game.
American Insurance Group, the insurance giant that is 80-percent owned by the US government, is in discussions with the government to secure additional funds so it can keep operating after next Monday, when it will report the largest loss in U.S. corporate history, CNBC has learned.
Sources close to the company said the loss will be near $60 billion due to writedowns on a variety of assets including commercial real estate.
That massive loss is likely to spur downgrades in its insurance and credit ratings that will force AIG to raise collateral that it doesn’t have.
In addition, if AIG’s book value falls below a certain level, as it seems certain to do, it will trigger default in certain of its debt instruments, say people familiar with the situation.
All of this adds up to a huge headache for the Federal Reserve and Treasury, which have already provided over $150 billion of assistance to AIG.