Aig Bailout

AIGFP was treated independently from its parent comp some(prenominal), it had to key only the results of their retroactive operations. (Vasudev, 2009) Therefore, it is possible, that the AIG management was not aware of all AIGFP actions and risks. In the year of 2002, AIGFP had no retribution obligations and its capital market operations generated a profit of $890 meg (15% of AIGs make out net income). The interest ii years disclosures were very similar. Originally, AIG announced a profit of $1,086 million in 2003. In both years they did not aro subprogram any payment obligations and praised their ceiling Market unit as AIGs driver for egression in opemilitary rating income. The most successful year was 2005. With a profit of $2.66 billion, the unit presented 25% of AIGs total income. In 2006, AIG apparently concealed details or payment obligations in its one-year report even though the Capital Market unit declared a deviation of $873 million. In all these fiv e years, risk in general was no issue in AIG disclosures. Finally, in 2007 AIG had to report a loss of $11.5 billion, mainly caused by the default swap business.

Though, in its annual report AIG did not expect these losses to affect the fiscal condition of the company as the management continued to survey that AIGFP will not realize significant losses from this differential coefficient instrument business (...). Since its creation, AIGFP has been a strong performer and is an classical function of AIGs diverse portfolio of businesses. They were certain that the losses of 2007 were just an riddance and would not recur in the future. (Vasudev 2009) The bailout itself took place in kinfolk 2008. On Friday, September 12, ! AIG needed $9 billion in cash to diddle its liabilities. The AIG corporate itself held $1 trillion in assets, but cod to regulatory constraints (money was held by subsidiaries) it could not use this money. Furthermore, it faced demands for collateral in the fare of $23.4 billion. At this point, the rating agencies warned...If you want to get a honest essay, order it on our website: OrderEssay.net

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