Monday, February 23, 2009

From Our Continuing Series : "They're Baaaaack...."

"Too big to fail" corporate crack whore AIG is back for more.

(The first $150,000,000,000.00 the American taxpayers gave it wasn't enough apparently).

Gosh, who could have ever predicted that the federal government's "money for nothing, stimulus for free" bonanza of the last 6 months would result in these bloated corporate junkies (the lucky ones who were "allowed" to survive) coming back for more.

I suppose the taxpayers can just "absorb" AIG's $60BN expected loss.

Obama's mortgage "plan" has us "absorbing" up to $200BN in losses each for Freddie Mac and Fannie Mae.

Why stop anywhere?

Wait...Is that Barack I see riding in on a stimulunicorn?

CNBC reports company expected to report $60 billion loss, largest ever

updated 3:18 p.m. ET, Mon., Feb. 23, 2009

AIG is in discussions with the government about securing additional funds so it can keep operating after next Monday when it will report the largest loss in U.S. corporate history, sources told CNBC Monday.

CNBC's David Faber said sources close to the company told him the loss will be near $60 billion due to writedowns on a variety of assets including commercial real estate.

He said that massive loss is likely to spur downgrades in the firm's insurance and credit ratings that will force AIG to raise collateral it does not have. Faber added that if AIG's book value falls below a certain level, it will trigger default in some of its debt instruments, according to people familiar with the situation.

The Federal Reserve and the Treasury Department have already provided AIG assistance of over $150 billion. AIG officials have not offered comment, Faber said.

CNBC said talks are focused on how the company can swap some of the debt held by the government for equity in AIG. Faber said the problem is that the government's ownership stake cannot exceed its current 79.9 percent, leaving officials to try and find a creative way to transfer value to the U.S. in exchange for AIG reducing its debt so that it can then borrow more from the government to meet its collateral calls.

AIG has borrowed roughly $40 billion from a $60 billion credit facility provided it by the Federal Reserve Bank of New York. If it can find a way to pay that down by swapping equity, it hopes to take it back up to a level that will allow it to meet its collateral and capital calls, Faber said.

Officials at the Federal Reserve Bank of New York have not returned calls.

[What poetic irony. They may as well take it off the hook.]

AIG's board is scheduled to meet this Sunday night in hopes of hammering out an agreement with the government, CNBC reported.

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