March 2nd, 2009
09:47 AM ET
5 years ago

U.S. takes another crack at AIG rescue

AIG lost more than $60 billion in the fourth quarter of last year.
AIG lost more than $60 billion in the fourth quarter of last year.

NEW YORK (CNNMoney.com) - Insurance giant American International Group reported a stunning $62 billion quarterly loss on Monday, while government officials unveiled their latest efforts aimed at preventing the collapse of the firm.

Overwhelmed by ongoing deterioration in the credit markets and charges related to its restructuring, AIG's losses overwhelmed the firm during the fourth quarter. Its $61.7 billion loss amounted to $22.95 per share.

AIG's loss for the full year was even more dramatic - $99 billion. In 2007, the company reported a profit of $9.3 billion.

To keep the company from cratering and causing broader fallout across the financial system, the government said it would overhaul its bailout, which is aimed at helping the besieged firm unwind in an orderly way.

"Given the systemic risk AIG continues to pose and the fragility of markets today, the potential cost to the economy and the taxpayer of government inaction would be extremely high," Treasury said in its announcement.

One main goal of the revamped rescue plan - now totaling $162.5 billion - is to help boost AIG's financial position by, among other things, reducing the interest it pays the government on its loans.

Key components of the plan included the government's decision to commit another $30 billion to the firm in exchange for cumulative preferred stock. The payment, which will come from the second half of the $700 billion rescue package enacted last fall, will not be a one-time payment but AIG will able to draw down the funds as needed to help strengthen its capital base.

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Filed under: TARP • Treasury
soundoff (128 Responses)
  1. Ken in NC

    Yes, take another crack at AIG. Maybe this time you can crack it open and sell off the smae parts of it to recoupe some of the taxpayers money. Then do like they do in China and imprison the heads of the company and confiscate their personal ownings.

    If you will imprison enough of them then the remainder of them will fall in line out of fear of imprisonment. If they do not fall in line then throw them in prison and while they are in prison give them a fair trial.

    March 2, 2009 12:14 pm at 12:14 pm |
  2. Jon in CA

    Why all the anger???

    Just because we have a President more interested in his jump shot than any concern for nationalizing Citigroup... why should we worry??

    The messiah will fix it!!! Hallelujia!!

    March 2, 2009 12:15 pm at 12:15 pm |
  3. Matthew, Detroit

    STOP SPENDING MONEY.

    STOP PUTTING US FURTHER INTO DEBT.

    PRESIDENT BUSH WAS TERRIBLE FINANCIALLY.

    Barack is a CAR WRECK FINANCIALLY.

    THIS GUY IS CLEARLY GUIDING US DOWN A ROAD OF RUIN.

    IN 30 DAYS HE HAS CAUSED MORE DAMAGE THAN ANY LEADER.

    We have to stop the spending.

    Let the markets correct themselves. Let companies declare bankruptcies. Let foreclosures happen. Let the banks work it out and let them go bankrupt or right off the bad loan. Let people lose their houses. LET US MOVE FORWARD. We are only heading down to ruin.

    THIS IS BARACKS problem now. He has to stop blaming Bush. He is going to blame him for the next 4 years and the 4 years after that.
    He needs to somehow be a man.

    He ran from the center and is ruling from the far left. This is going to kill us.

    March 2, 2009 12:17 pm at 12:17 pm |
  4. ghostwriter

    I am also inclined to let them fail, but then again, who do you think will wind up with the check if they leave the table thru bankruptcy? You guessed it, we will. And that will lead to nationalization of AIG, which some folk don't want.

    March 2, 2009 12:17 pm at 12:17 pm |
  5. Sharon - NC

    AIG should be taken over and sold in pieces to the other stable insurance companies. Then send the attorney general after the executives.

    March 2, 2009 12:18 pm at 12:18 pm |
  6. Matthew, Detroit

    SEVENTEEN PERCENT has come off the S&P since your inauguration, and we're nowhere near done for today.

    It'll likely be 20% by the close at the current rate of deterioration with the largest falls being on your inaugeration date and then from the date where it becamse clear that YOUR TREASURY SECRETARY was going offer "more of the same" that has FAILED.

    You are certifiably insane; only an insane person does the same thing over and over, which has repeatedly failed, and expects a different result.

    I hope you enjoy this Barack, because it's all yours, and every man, woman and child in America needs to understand that it is your refusal to do the right thing that has continued the bleeding in their 401ks (now 201ks and soon 101ks or even 51ks), IRAs, and soon their pension plans will all blow up, bankrupting over 100 of our largest firms and putting 10 million more people out of work.

    Congratulations Barack; we are now in a full-on economic and market meltdown over the last week and it is getting MUCH WORSE as a direct and proximate cause of your policies

    March 2, 2009 12:26 pm at 12:26 pm |
  7. Axl in Iowa

    I bring $700 home per week. I think I'll go to the bank today and borrow 2 or 3 million dollars. Then I'll go the Grand Canyon and throw it all off a cliff and go home patting my self on the back. It's OK cuz my kids and grand kids will pay it back for me. Makes perfect sense. Right America. You friggin idiots!!!!!

    March 2, 2009 12:30 pm at 12:30 pm |
  8. Donna from Colorado Springs

    AIG needs to be in the same position that many Americans are in right now.......not knowing where the next dollar is coming from. Let them twist in the wind!

    March 2, 2009 12:33 pm at 12:33 pm |
  9. TM in CO

    Why don't you bailout the American people instead of these businesses who cannot seem to get it right?

    March 2, 2009 12:38 pm at 12:38 pm |
  10. Jim

    We continue to pour money into this bottomless pit, but balk at helping the auto industry. The irony of it all. Oh well, another 30B gone "Without a Trace".

    March 2, 2009 12:41 pm at 12:41 pm |
  11. Steve in Las Vegas,NV

    Throwing even more money at AIG is nothing more then rearranging the deck chairs on the Titanic!!!

    Let them sink, as they still have execs getting millions for doing nothing...Seen no progress from them, so why bother, Oh Wait, I know...Their party and retreat fund is getting low.

    March 2, 2009 12:44 pm at 12:44 pm |
  12. David S.

    How much more money do we have to throw into this sinking ship before it goes under the waves?

    March 2, 2009 12:44 pm at 12:44 pm |
  13. martin

    Obama's administration is growing more and more corrupt by the day. Its funny how they keep throwing money at the problem over and over again. Just let AIG fail. There's no point in giving CPR to a corpse.

    March 2, 2009 12:48 pm at 12:48 pm |
  14. Mark

    If we are to give anymore money to this company we need to make the entire executive board resign without any compensation. This is ridiculous.

    March 2, 2009 12:49 pm at 12:49 pm |
  15. Brad

    I deserve free money too!

    March 2, 2009 12:53 pm at 12:53 pm |
  16. thomas

    AIG is really looking like a dead horse. It appears to be the ultimate rathole.

    March 2, 2009 01:00 pm at 1:00 pm |
  17. Chris from NC

    Maybe if those knuckleheads used their bailout funds responsibly by creating jobs and reorganizing themselves instead of crafting golden parachutes and fancy executive getaways, they wouldn't be asking for more of our hard-earned money.

    March 2, 2009 01:00 pm at 1:00 pm |
  18. Greg

    This is all a result of deregulation and allowing companies to merge again and again until they are behemoths that can take down the economy if they fail. Capitalism is not the force of nature some free marketers think it is. It needs to be carefully regulated to work properly.

    March 2, 2009 01:00 pm at 1:00 pm |
  19. yuri

    Yikes! What an avalanche of misguided management mishaps and mayhems maulin' the mainstream media and men alike. Financial institutions like the AIG ought to know better than squander the bailout and to earn the wrath of the public by incurrin' a littany of losses. God save the economy as whole!

    March 2, 2009 01:02 pm at 1:02 pm |
  20. Il_voter

    we cant let AIG fail. Too many people depend on it. They have got involved with this Mortgage mess. This is a false propoganda about executive bonuses. Formar allstate CEO Ed Liddy is inharge of AIG. And he is taking only $1 as a compensation per year and do not fly in private company planes.

    People please read article in Fortune magazine about AIG published few months back.

    March 2, 2009 01:04 pm at 1:04 pm |
  21. Elizabeth, Philadelphia, PA

    It kills me that some of you are blaming Obama. Wake up and smell the rotten financial system created by Bush and his cronies! All of you who blame Democrats for "changing" what is obviously hopelessly corrupt and broken need to get a life. You are probably partly to blame for this; at least Obama is trying to fix the mess that Bush began. Why aren't you talking about Bush–and by the way, where the heck did he go? The man should be in jail! Or maybe he could pay the USA some of his many millions to help solve this financial crisis...

    March 2, 2009 01:06 pm at 1:06 pm |
  22. Jon

    When george bush does this, it's called helping the banks out......when obama does this its called treason and socialism.....

    Republican Hypocrites.......

    Maybe if we didnt spend so much money originally under BUSH'S bailout that was used primarily to BAILOUT BANKS rather than OBAMA'S which is meant to rebuild bridges, schools, and roads.

    Obama's Bailout = GOOD for this country

    George Bush's Bailout = GOOD FOR BANKS

    March 2, 2009 01:11 pm at 1:11 pm |
  23. diana

    has the gov't learned nothing? we need to get rid of these "experts" who keep throwing away our money.. after the last fiasco with aig, and subsequent follow-ups with other financial institutions, the gov't needs to say "n-o " period. and when will the gov't stop being so trusting of everybody? they want everything to be on the up and up, with ethical conduct, but c'mon now, let's be realistic. it ain't gonna happen. tighter control on the spending. maybe a disinterested 3rd party to issue checks after aig (or whomever) has presented sufficient evidence that they need the money.. maybe a team of regular citizens to do this. obviously, the rich experts can't or won't. maybe because of special interests?? let us, the citizens actually decide how and where to put the money. and how much. unless you are extremely wealthy, you don't throw your money around like this. the gov't doesn't know how to live within their budget. i'm just sick of it all. even with all this money, they still aren't loaning, they still aren't taking care of what they are suppose to do. take the money back.

    March 2, 2009 01:23 pm at 1:23 pm |
  24. tired of AIG

    LET AIG FAIL!!

    IF WE GIVE THEM MONEY AGAIN, WE WILL SEE THEM....AGAIN....HAVING ANOTHER LAVISH PARTY!!??

    Everyone claims they want capatilism...Well, let 'em fall on their collective butts and golden parachutes!

    March 2, 2009 01:30 pm at 1:30 pm |
  25. Beverly, NYC

    If AIG is too big to fail it needs to be broken up and it's profitable busineses sold off. Bonuses and "retention Awards for 2008 should be repaid, and Congress should vote on regulations to monitor these companies. Enough of these pigs at the trough.

    March 2, 2009 01:31 pm at 1:31 pm |
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