Mortgage Servicing Fraud
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        AIG Needs Another $10 Billion from the Fed

                                                               
                                        By Dividend.com Staff
December 10th, 2008
                                       
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American International Group (AIG) has just disclosed it owes some Wall Street firms $10 billion from trades that went bad.

The loss stems from speculative investments in mortgage and corporate debt assets. The Wall Street Journal is reporting the trades were engineered by the insurer’s financial products unit since the original bailout package was announced. The company has responded by saying the exposure had been fully disclosed and comprised about $10 billion of AIG’s $71.6 billion exposure to derivative contracts on collateralized debt obligations.

The Bottom Line
It seems like every announcement from AIG pertains to some sort of funding shortfall, or about the need to tap a bit more of the TARP. This latest news comes after the government said it would provide a $150 billion rescue package to AIG to help it remain in business amid the worsening credit crisis. We would avoid the temptation of the under $2 shares of AIG, as we have not seen much evidence to this point that the bailout is accomplishing anything.

http://www.dividend.com/blog/?p=4140

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AIG Provides Update on Federal Reserve Borrowings
Friday, October 24, 2008
 
American International Group, Inc. (AIG) today provided detail of its usage of the two-year, $85 Billion Revolving Credit Facility and the separate $37.8 Billion Securities Lending Agreement arranged with the Federal Reserve Bank of New York.

As of October 22, 2008, AIG had outstanding borrowings of $72 billion under the $85 billion credit facility.

AIG is using the funds from this facility primarily for collateral obligations related to the AIG Financial Products Corp. credit default swap portfolio and for general corporate purposes.

http://www.istockanalyst.com/article/viewiStockNews/articleid/2736992

When and if this mess if ever all over, we will see that part of the playbook involved lucrative union of mortgage servicing fraud with credit default swap speculation on CDOs.  To the Feds, AIG is a sacred cow.  A quick Google AIG, Cornelius V. Starr, Maurice R. "Hank" Greenberg tells it all.
 
Our tax dollars going to pay out on credit default swaps helped along by servicer complicity to make sure we default on our mortgages? You bet!  

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HankGreenburg

AIG Owes $10B in Trade Settlement (WSJ)
AIG has managed to pi$$ off the powers that be again, showing $10B in trading losses. The specific instrument traded isn't listed, but we were given this clue: "credit protection instruments" which leads me to believe SWAPs were the soup de jour.

Of Immediate concern is that the money issued by the FED in days of recent can't be used to this end, and the FED doesn't have any "immediate plans" to step in and help the ailing Insurance giant. I'm sure I'm not the first to say it, but I'm the one saying it right now: Unfortunately, it's time to wind AIG down.  http://dealbreaker.com/2008/12/opening-bell-121008.php

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