[1eaglescout]

http://www.bloomberg.com/apps/news?pid=20601087&sid=aHdlGMn29NOs&refer=home

AIG's Long-Term Debt Ratings Cut by S&P, Moody's (Update1)

By Bei Hu

Sept. 16 (Bloomberg) -- American International Group Inc.'s long-term counterparty rating was cut three levels to A- from AA- by Standard & Poor's, and its senior unsecured debt rating was downgraded by Moody's Investors Service to A2 from Aa3.

S&P said it cut the rating of the largest U.S. insurer by assets because of a ``combination of reduced flexibility in meeting additional collateral needs and concerns over increasing residential mortgage-related losses.''

S&P also lowered AIG's short-term counterparty credit rating by two levels to A-2 from the top A-1+ rating, and cut its counterparty credit and financial strength ratings on most of AIG's insurance operating subsidiaries by three notches to A+ from AA+. The ratings remain on watch for a possible further downgrade, S&P said.

Moody's said in a statement that its decision was made ``in light of the continuing deterioration in the U.S. housing market and the consequent impact on the group's liquidity and capital position due to its related investment and derivative exposures.''

Moody's also placed AIG's long-term and Prime-1 short-term ratings on review for possible downgrade.

 

[danpauselius]

Probably this week or next. How about Washington Mutual? Or Citi?

 

[jaypro]

http://www.bloomberg.com/apps/news?pid=20601087&sid=aHdlGMn29NOs&refer=home

Wow, this ratings downgrade will force AIG is post even greater collateral then the $40-billion they were looking for earlier today. This too will be another shockwave through the market.

The Asian markets are getting torched by 6% tonight... AIG might dive the US another 500 points tomorrow.

 

[RosesInWinter]

Tokyo openned low...

 

[mongoose]

Tokyo opened in toilet

since AIG deals in insurance on bonds of corporate and financial security debt

their exposure was probably huge on leemans alone.

^^^^^^^^^^ taps ^^^^^^^^^

 

[SLCLee]

Puts galore for the forseeable future.

 

[danpauselius]

As I mentioned in another thread, AIG also is the largest carrier of "errors and omissions" insurance for the financial industry. I think it's fair to say that there will be lawsuits over errors and omissions in the coming months against many financial institutions. Guess investors got their hand on their butt.

An AIG bankruptcy could involve a total loss of around a Trillion US Dollars and take with it the pension funds of more than one State. According to some reading I was doing, the banks in the Far East are behaving as if the collapse of AIG is unavoidable. Seems it will happen this week.

 

[mongoose]

AIG is carrying bond insurance for a lot of marginally capatilized funds, and corps. their failure will push the basis point spread up as there are not a lot of companies who handle this type ins. the result will be higher bond yields, higher borrowing costs and a lot of coorps and funds going under. they are a domino at the junction -- their failure will spread failures in several different directions.

women and children first, it looks like its lifeboat time

 

[solinvictus]

AIG insures bonds, lives, property, liability, casualty, and insures high-profile real estate and ocean vessels. If AIG goes down, it'll suck a lot of people and companies down with it in its wake.
AIG has been on watch for a couple of years because they're simply too big and too spread out to perform any single profitable function well.

 

[Lady Bug(ging)]

I give them a few more days. Hopefully they make it to the weekend so it won't make as much news. If they go before Friday it will cause some huge ripples that we REALLY don't want to feel.

 

[1eaglescout]

 

[1eaglescout]

Well, here it is.......

http://www.nytimes.com/2008/09/17/business/17insure.html?_r=2&hp&oref=slogin&oref=slogin

Fed Readies A.I.G. Loan of $85 Billion for an 80% Stake

By MICHAEL J. de la MERCED and ERIC DASH
Published: September 16, 2008
In an extraordinary turn, the Federal Reserve was close to a deal Tuesday night to take a nearly 80 percent stake in the troubled giant insurance company, the American International Group, in exchange for an $85 billion loan, according to people briefed on the negotiations.

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Richard Perry/The New York Times
The scene Tuesday outside American International Group's building in Lower Manhattan.

Related
Video Analysis: Joe Nocera on the Importance of A.I.G.All of A.I.G.’s assets would be pledged to secure the loan, these people said, and in return, the Fed would receive warrants that would give it an ownership stake. Stock of existing shareholders would be diluted, but not wiped out.

If the Fed takes a controlling stake, it is likely that it would want to replace A.I.G.’s board as well as its chief executive and chairman, Robert B. Willumstad.

The Fed’s action came after Treasury Secretary Henry M. Paulson and Ben S. Bernanke, president of the Federal Reserve, went to Capitol Hill on Tuesday night to meet with House and Senate leaders. Mr. Paulson called the Senate majority leader, Harry Reid, Democrat of Nevada, about 5 p.m. and asked for a meeting in the Senate leader’s office, which began about 6:30 p.m.

The Federal Reserve and Goldman Sachs and JPMorgan Chase had been trying to arrange a $75 billion loan for A.I.G. to stave off the financial crisis caused by complex debt securities and credit default swaps. The Federal Reserve stepped in after it became clear Tuesday afternoon that the banking consortium would not be able to complete the deal.

Without the help, A.I.G. was expected to be forced to file for bankruptcy protection.

The need for the loans became necessary after the major credit ratings agencies downgraded A.I.G. late Monday, a move that likely to have forced the company to turn over billions of dollars in collateral to its derivatives trading partners worsening its financial health.

Until this week, it would have been unthinkable for the Federal Reserve to bail out an insurance company, and A.I.G.’s request for help from the Fed of just a few days ago was rebuffed.

But with the prospect of a giant bankruptcy looming — one with unpredictable consequences for the world financial system — the Fed abandoned precedent and agreed to let the money flow.

 

[mongoose]

ya beat me too it.

yep and this will be exceptionally expensive. 30-40B down payment and then as those they insure lose money, down the road payments.

they are loans to an entity who has no ability to pay them back ----- wait a minute does this sound like a grotesquely huge subprime loan? but im quite sure our govt will administer this with all the fiscal competence we have become accustomed to
from their past record of unparalleled and exemplary ------ **** who am i kidding

 

[RosesInWinter]

Well, We The People now own 80% of AIG, along with Freddie and Fannie.

 

[almac]

All this makes me wonder how long it will take for canadian banks to crumble...

peace
al

 

[jaypro]

It is the only move left... however the next shoe to drop is right around the corner. The US Federal Reserve Corp pumped another $50 billion into the money markets today along with a hugh supply from the European Central Bank which inadvertingly crashed the Russian market (down 21% today). Even if the Fed saves AIG tomorrow.... contagion is going to take the market way down to flush the remaining fiction money from the system. Only a sizable crash can clear the problem.... the Fed is just slowing the fall.

 

[mongoose]

------------------85,000,000,000----------------fer 80%

so when do we as the new shareholders git our shares?

 

[danpauselius]

$85 Billion "Loan"? Where I'm from, we call that a hell of a bail-out.

Doesn't it make you wonder though, $70 B yesterday, $85 B tonight. Where did this money come from? My guess is those printing presses are too hot to touch right now. And in about 12 months, we'll get slammed with the inflation caused by this crap ... just when we really won't be able to afford it.

Anybody else feel like jumping off a bridge?

 

[535]

Well, We The People now own 80% of AIG, along with Freddie and Fannie.

I want my dividends in the form of yearly tax rebates!!!!!......

 

[535]

, $70 B yesterday, $85 B tonight. Where did this money come from?

Your ass.....Just wait...