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Cayman Isl granted independence from England in 1962 but remains a protectorate of the United Kingdom. Has its own governor and legislative bodies however. Any regulations concerning banking or financial activities would need to be legislated by the Caymans and hence their loose philosophy.
For those interested in Barack Obama and the current financial situation. Q&A's:
http://my.barackobama.com/page/content/contact/
The future of Lehmans is very uncertain with the BK going on.
The common could end up with nothing and just being cancelled like United Airlines was about 6 years ago. I was in that stock hoping for a rebound but it just kept declining to 0.00 finally. It's a long shot hoping for much more than it is and it all depends on how that BK business works out. There are some very smart people working there but I am afraid they are
going to become a fatality when it is all said and done.
However, in the meantime you can play it like you guys are doing just don't forget to find a chair when the music stops.
I went to the Cayman Islands some years back to check out the international banking situation. That entire island is loaded with Banks and related Financial Institutions of every conceivable definition. It is a mecca for investors but the IRS frowns on US citizens doing much business there for obvious reasons but a fascinating place to visit. I made no investments there but met many interesting people. It is probably the wealthest Island on earth per capita. The locals are made up of 57 Heinz varieties from every nation. English is the common thread there. The turtle farms are very interesting and a common staple of the local diet served in every resturant.
Yes its good ten doubles but AVF is even better and paying currently a 40% yield on the AIG bond. See that board. I have confirmed they will be able to meet these quarterly payments by agreement with the FEDS on 9/26/08. See the AIG
8K for that date in this regard.
However, I do think they will suspend the divy for the common until the FEDS move on.
GLTU
Thanks Joe good find buddy.
From Joe Stocks on the AIG board:
http://investorshub.advfn.com/boards/read_msg.aspx?message_id=32541284
I give it $7-10 within 12 months on AIG common. I do believe they will restore the dividends once the FEDS move on.
The United States government is going to come out of this AIG bailout smelling like a rose IMO. They will have a financial stake in the company going forward which they can sell to the market, they will receive back all of their $85B and they will also earn interest in excess of 11% per year on the outstanding balances. It was a very smart arrangement. Cheers to the FEDS for pulling it off. This might take a year or so but AIG will emerge an independent company once again.
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You guys have made some good money trading the volitility in this stock. Congratulations to all you trading sharpies. GLTA
Paulsons plan to disperse the money thru the Treasury Dept isn't about to happen. They have layered congressional oversight heavily into the pending bill.....it will be extremely tightly controlled by the legislative and executive branches of government make no mistake about that issue.
Listen, I talked to AIG HQ today and found them to be professional in the extreme and able to take direct calls if anyone wants the number let me know for your questions. The government 79.9% stake is a done deal it cannot be reversed.
However AIG could emerge from the FEDS control if they can pay back the money on loan to them.
I believe it is possible to keep track of how has been dispersed by the FEDS on their website but I didn't write it down for you folks.
Nope he has clearly violated several legal principles and will learn a hard lesson from all this. I do intend to tell others also how to sue him and win once I have the first judgement. I am also going after USSE after the SEC gets thru with that CEO.
I expect to get back the money I lost to that gentlemans lies as well. When I am done in a year or two attacking these worthless ceos that infect the pinksheets then perhaps it can be fun again for everyone.
Don't worry it shouldn't impact you much if at all. However law suits are never good news for any company, he is simply to small for a regular class action like I am a part of with Countrywide and soon to be Lehman Bros.
I do intend to make an example of what not to do even if you are on the crummy pink sheets and hiding behind non-disclosures he is simply too stupid to keep his mouth shut and has proved it in writing many times. So he is a cooked legal goose.
Can you tell I am angry? Ya, I am.
Just do a private placement with Newton for 1 billion shares he is going to need the money when I get down with him. Thanks.
Yes AIG is making some positive moves now. Once they get started this is going to roll quite nicely. The dividend payments on AVF are confirmed by corporate agreement with the FEDS but I don't believe it covers the common stock.
http://investorshub.advfn.com/boards/read_msg.aspx?message_id=32532635
Thanks prof. You read those 8K's yet? I haven't had a chance to take a look at them.
New 8K filings today and the past few days. It is definitely cast in stone now per Susan Bennett that the government will receive 79.9% of the AIG common shares.
http://investorshub.advfn.com/boards/read_msg.aspx?message_id=32529683
Prof there are 2 new 8K-s filed by AIG on Friday. I have been told by Susan Bennett at AIG that contained within one of them is the agreement to pay the bond holders in December. Look at all the filings.
I have not had a chance to dig thru them all yet but I will.
You can access the AIG SEC filings by going to:
www.aigcorporate.com
click on investors info tab
click on SEC
Susan is in a 65 story bldg in downtown Manhatten.
http://www.sec.gov/cgi-bin/browse-edgar?company=&CIK=0000005272&filenum=&State=&SIC=&owner=include&action=getcompany
This just in on AIG bonds:
http://investorshub.advfn.com/boards/read_msg.aspx?message_id=32523064
I have just received this email from AIG investors relations verifying that they will meet their bond obligations on all of their notes which also includes AFF another debenture:
Your email was forwarded to me to handle. It is the intention of AIG to meet its bondholder and debenture holder obligations. If you have any questions please contact me.
Susan Davidson
Assistant Director
AIG Investor Relations
212-770-6387
-----Original Message-----
From: MARTINGALE97504@aol.com
Sent: Saturday, September 20, 2008 2:49 PM
To: AIG InfoExchange
Cc:
Subject: Attn. Charlene M. Hamrah
Dear Ms. Hamrah:
I am an investor in AVF can you assure me that the terms of the AIG 7.70% Series A-5 Jr. Subordinated Debenture outlined in the attached from your prospectus on the matter will be honored? Will the Dec 18,2008 dividend payment be made in the amount of .$.482?
Thank you for your attention to this matter.
Very Truly Yours,
Nick X XXXXXX XXX XXXXXXX
_____
Looking for simple solutions to your real-life financial challenges? Check out WalletPop for the latest news and information, tips and calculators.
This is from the Prospectus of AVF:
If any amount is not paid on the scheduled maturity date, it will remain outstanding and bear interest at a floating rate payable quarterly in arrears and we will continue to use our commercially reasonable efforts to sell enough qualifying capital securities to permit the repayment of any remaining principal amount of the Series A-5 Junior Subordinated Debentures in full. We must pay any remaining principal and interest on the Series A-5 Junior Subordinated Debentures in full, whether or not we have sold qualifying capital securities, on the final maturity date. The final maturity date is initially December 18, 2062
AIGReference: (TC 2128707)
http://investorshub.advfn.com/boards/read_msg.aspx?message_id=32471812
On the surface of this it looks like AIG is going to raise funds thru a preferred share offering without a vote from the shareholders. This bodes well for AVF as the key thing of course is the payment of the interest on these bonds. No doubt the preferred shares will get some sort of dividend payments.
We shall all greatly miss the Lion of Hollywood Paul Newman.
His life is an amazing testimony to his good Faith and Love for Gods children upon this earth.
http://investorshub.advfn.com/boards/read_msg.aspx?message_id=32485631
Yes Paul Newmans great charity gifts were a living monument to his life which will endure into future generations. Yes, he will be terribly missed by all of us left behind but upon the Highest Plains of Eternal Life he will be welcomed as a good and decent man and I suspect his work will continue in heaven as it was upon this earth.
Thanks for dropping by Nick. This is really the type of thing that people should put in their 401K plans and other long term accounts such as IRA's and so on.
Once I bought a 10 year CD at 13.5% interest and while it was boring it paid out alot of money over time. For example with this security held until maturity a person would make approximately $78 over a 39 year period. Not paid for a $5
investment.
Of course the fate of this security is closely alligned with what happens at AIG as a whole and so we will be posting breaking news here as well as over on their board.
I think that Maurice Greenberg and others such as STAR CAPITAL are holding shares in this security. It only costs them $20M a quarter to keep the payments current. I would imagin that this would be a serious black eye to AIG if they did not follow thru on these payments as scheduled.
Of course there are provisions within the offical prospectus which provide for accrued interest for any reason on the failure to deliver these payments which stand at Libor+3.616% interest. Libor has been going up lately and I do not know what the current base point is but 361 bias points above Libor isn't too bad a return on our money.
With the current interest in possibly rescuing AIG from the clutches of the FEDS, this play would also pay off handsomely and by its very nature it is a bond essentially.
See this link on corporate bonds:
http://www.investinginbonds.com/learnmore.asp?catid=10subcatid=48&id=159
These are called Fixed Rate Securities. The above link describes their value to investors.
Thanks for dropping by QuinnTM hope to see more of you.
Who's picture is that in your signature MSG?
And take a peek at AVF as well. Currently at $5.42 down from its high of $8.50 a few days ago but up from its low point of
$2.00 on 9/16/2008. It was just there for a brief while and was yielding at that time close to 100%. Currently yielding
35.5%. The next quarterly dividend is due on 12/18/08 and you will find that this security is held mainly by institutions and wealthy private investors. I expect it will once the next dividend payment is confirmed go back into the $20 range once more where it has been trading since its IPO in 2007. I do not know if this stock is currently on the NO SHORT SALE list or not. I couldn't find it there but it may very well be present. If not it is an oversight I would imagin.
I have started a new board for the security AVF which is essentially a subordinated debeture (bond)from AIG which is currently yielding in excess of 25% per year payable in quarterly installments. This was brought to my attention by another Ihuber Joe Stocks who found it initially and I found it at the same time as well after searching to see if Lehmans had anything going on and then checked AIG for the heck of it. This is a link to that new board. I would invite you to stop by any time.
http://investorshub.advfn.com/boards/board.aspx?board_id=13447
Welcome to this new board. Of course I also hold some shares of AIG common stock as well and this security and the common are closely related so it is helpful to follow the AIG board as well on I-hub or Yahoo or other sites. I would encourage meaningful discussion on this board and all points of view are welcome.
My backround is: BA Degree from California State University, Fresno. One year shy of a degree in Electrical Engineering from Oregon Institute of Technology. Juris Doctorate in Law from the UNC School of Law 1993. Many years of investing since I was granted my first stock options while employed by Advance Micro Devices (AMD) employee number 98 in 1972. I was the founder and President of my own electronics distribution company incorporated in California as Data Bridge Technologies, Inc. in the 1980's.
This post I have attached below is relevant because it shows that apparently these billionaire investors in AIG such as Maurice Hank Greenberg are taking steps to take back control of AIG and hence AVF from the United States Government.
Watchlist Portfolio Toplists AVF: Quote / Charts / News Forex
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Posted by: COLLECT Date: Saturday, September 27, 2008 12:13:26 AM
In reply to: None Post # of 902
AIG Notice
Date : 09/26/2008 @ 5:04PM
Source : Business Wire
Stock : American International Group, Inc. (AIG)
Quote : 3.15 0.13 (4.30%) @ 7:57PM
AIG Notice
On September 23, 2008, American International Group, Inc. (“AIG”) announced that it had signed a definitive agreement with the Federal Reserve Bank of New York for a two-year, $85 billion revolving credit facility. Under the agreement, AIG will issue a new series of Convertible Participating Serial Preferred Stock to a trust that will hold the Preferred Stock for the benefit of the United States Treasury. The Preferred Stock will hold approximately, but not in excess of, 79.9% of the aggregate shareholder voting power. The issuance of the Preferred Stock, which will be convertible into Common Stock of AIG following a special shareholders meeting to amend AIG’s restated certificate of incorporation, would normally require approval of shareholders according to the Shareholder Approval Policy of the New York Stock Exchange (the “NYSE”).
The Audit Committee of the Board of Directors of AIG has determined that delay necessary in securing shareholder approval prior to the issuance of the Preferred Stock would seriously jeopardize the financial viability of AIG. Because of that determination, the Audit Committee, pursuant to an exception provided in the NYSE’s Shareholder Approval Policy for such a situation, expressly approved AIG’s omission to seek the shareholder approval that would otherwise have been required under that policy. The NYSE has accepted AIG’s application of the exception.
AIG, in reliance on the exception, is mailing to all shareholders a letter notifying them of its intention to issue the Preferred Stock without seeking their approval. AIG will proceed to issue the Preferred Stock when it has received all material approvals of governmental authorities required for the issuance.
American International Group, Inc. (AIG), a world leader in insurance and financial services, is the leading international insurance organization with operations in more than 130 countries and jurisdictions. AIG companies serve commercial, institutional and individual customers through the most extensive worldwide property-casualty and life insurance networks of any insurer. In addition, AIG companies are leading providers of retirement services, financial services and asset management around the world. AIG's common stock is listed on the New York Stock Exchange, as well as the stock exchanges in Ireland and Tokyo.
That was a very intelligent and well said post meil. Extremely accurate advice which I myself have only recently come to adopt. I made outstanding profits with AVF on a bond
fund which AIG sponsors but did not take the nearly 300% profit I once had. However, I am sticking with it because of the high yield and the good chance that the yield of 58% on my holdings will pay off over the next 40 years or so. Good job and again....this is very sage advice as I too have won big and lost big for believing in face to face chats with CEO's.
JD UNC School of Law
martingale
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September 26, 2008, 9:49 am Link to This E-mail This Topics Investment BankingIndustries Financial ServicesThe seizure of Washington Mutual may be the largest bank failure in United States history, but unfortunately, there’s nothing new about a national banking crisis.
In fact, a just-released report from the International Monetary Fund counts 124 banking crises in the last 27 years, in countries like Japan, Argentina and Britain.
Economists at Merrill Lynch looked at the report and summed up some of its most interesting findings. Among other things, it showed that the average fiscal cost — net of any recoveries down the road — related to managing a banking crisis is a substantial 13.3 percent of a country’s gross domestic product.
That doesn’t bode well for the idea, floated this week by Warren E. Buffett, among others, that United States taxpayers might actually see a profit on the current proposal to use $700 billion to buy troubled assets from financial firms.
“The government is highly unlikely to make a profit on any recapitalization program,” Alex Patelis, the Merrill economist, wrote in the report.
The average recovery rate in a banking crisis averaged just 18 percent of the gross costs.
A look at Japan’s financial crisis in the 1990s is instructive, the Merrill report said. Like the current American crisis, Japan’s banking turmoil included the rescue and disposal of home-loan companies and the bankruptcy of a big securities firm — although the crisis in the United States seems to be unfolding much faster than Japan’s, possibly accelerated by the magic of securitization.
Judging from previous crises, Merrill’s economists suggest that the United States should move quickly to declare certain banks “survivors” and put the others out of their misery.
Doing so, they said, would end the “who’s next?” game that has gummed up the credit markets:
The Asian crisis teaches us that it is imperative that U.S. policy makers tell us which financial institutions will survive; and which not. This could possibly involve blanket government guarantees to unfreeze money markets. Until this uncertainty is resolved, financial institutions will be reluctant to deal with each other.
15 comments so far...
1.September 26th,
2008
10:43 am I think todays stock market action, should make law makers question the need for this bailout. We have been told time and again that without tarp, the market would implode. Yet, today, after a night filled with headlines suggesting talks were far from conclusion, the dow jones is only down 50 pts.
Everyday this week a major financial institution has successfully sold billions of dollars of stock (Goldman Sachs, Capital One, Morgan Stanley, JPMorgan). Clearly there is interest in owning financial names. JPMorgans purchase of Wamu is a perfect example of a self-funded solution for the industry.
Yes bad banks will fail, but the stronger banks will rush in to purchase their deposits. That is how a market works. Any bailout without warrants if just simply stupid.
— Posted by Dave
2.September 26th,
2008
11:07 am Is the problem that those who hold the big money are freezing the flow of that money out of lack of confidence (read: fear of lack of profit)? Have these same players benefitted in huge proportion by the market operating as it has been in recent times? Have these players amassed money in a market shaped by successive deregulations and shady/risky assumptions and the creation of several fantasy financial instruments? Have major players had a field day using the average Joe’s home or dream of home ownership in a big fantasy poker game? (Who can explain–and now justify–these complex derivative financial instruments? (Not even Warren Buffet, he has said.) It would be helpful to define who is freezing the money versus who caused the crisis. If the answer is: a lot of the same people, perhaps the government can assist them in unfreezing the money by other means than a big cash donation. Is the money there already? How can the government promote or enforce a no-freeze, other than by begging for confidence bought with the consequence of American taxpayers’ increasing debt and increasing loss of access to the American Dream? Have we heard from the right economic experts? Nothing about this crisis is simple. I do wonder at what point a crisis calls for criminal investigation of the actions that have led us to the brink. Not yet, apparently. There’s only time now for big, blank checks and placating of the anonymous (to the average observer) “markets.” Instead of breeding fear and shock in a time of crisis, perhaps we could stand to hear from people with ideas other than what we’ve heard. There is one idea I do have that is pretty straightforward about the folks who have so efficiently brought us to this miserable economic point through misguided policies and selective deregulation (and some might say profiteering) for the past eight years. How’s this idea: Throw the bums out.
— Posted by commonsense
3.September 26th,
2008
11:17 am Yes, finally some correct thoughts are eminating out into the public. The answer is so simple. The USA zoombie banks, financial institutions, mortgage instruments, defaulted mortgages, impossible debtors and related distressed assets as well as bubble real estate and asset values of all types must be……
put to rest as soon as is possible without regard to stability, feelings, job losses and most importantly political donations. (I too have lived through, read and studied the history of financial and bank failures. The big common mistake is to try and save the dead.)
Robert
Washington, DC
— Posted by Robert
4.September 26th,
2008
1:38 pm Agreed. This is common sense approach avoiding throwing good money after bad. Anytime Washington tells the us how much money we are being saved, the US Tax Payer better hide their wallet.
Let the markets settle themselves by reaching their own level and move on from there. It may be painful but it will be fast, it will be done, and the survivors can rebuild.
Atlanta, GA
— Posted by Gary
5.September 26th,
2008
2:08 pm Given that 1.739 trillion dollar is 13.3% of 13 trillion dollar US Economy, Congress only needs to fund F.D.I.C around 1.7 trillion doors to repossess to zombie banks.
Mike
KC, MO
— Posted by Mike Pomeroy
6.September 26th,
2008
2:42 pm The above states succinctly why the $700B package will not work out. Banks will try to sell their most toxic assets at ridiculous prices and our politicians will oversee that Uncle Sam is generous to their constituent banks and brokers. Thus, those banks having unloaded their problems on to the taxpayers are free to generate more toxic loans and securities to sell to Uncle Sam instead of some Chinese state bank. Let’s put out of misery those banks that have engaged in shoddy business practices and when only the strong remain, our banking infrastructure will be based upon a solid foundation and not be a house of cards.
Ben
Bellevue, WA
— Posted by Benjamin Lee
7.September 26th,
2008
3:01 pm Can anyone tell me if the Swedish response to their bad real estate loans would be a viable way for us to proceed? Or if it isn’t, why it isn’t?
— Posted by Ray Poggi
8.September 26th,
2008
4:09 pm WHERE IS THE ACCOUTABILITY ?????
Why is no one asking how we got into this mess, and hold the many factions accountable. There obviously are MANY entities responsible, and they should share in the cost to get us out of it.
1. The CEOs, who were compensated many millions for NOT doing their job, should return much of their loot.
2. The bond rating agencies, who gave AAA ratings to junk should be severely penalized.
3. The regulators, paid to oversee the various institutions, and at a minimum sound the alarm, should be held responsible.
4. Congressional and Fed Reserve members, charged to
prevent this calamity should be voted out of office.
5. Finally, the people who signed up for loans, they knew they could not afford, should pay a severe penalty.
Accountability for one’s actions, in the many facets of our life, should be made a major factor. ‘Lets Party Today and Don’t Worry About Tomorrow’ should be history.
— Posted by Ralph Pincus
9.September 26th,
2008
4:31 pm When any “bubble” bursts there is pain, misery, and a scramble to pick up the pieces. Remember the .com bubble burst, the real estate bubble burst and savings and loan failures on the 1980’s. Does anyone else think it is ironic that much of our dept is held by communist China, as the capitalist US government is preparing enormous bail out plans for Wall Street?
— Posted by David
10.September 26th,
2008
4:51 pm A look a the foreign banks to be bought out.
Case in point BARKLEYS — Cost 20 Billion Dollars.
The claimed reason is that they employ 30,000 US citizens.
Divide 20 Billion by 30,000 ===>>>>>>>
It will cost an average of $666,666 to save each of these
jobs!
Can anyone in DC do simple division anymore.
The US can ill afford to spend such funds, when its own
highway fund is also bankrupt.
— Posted by Dan Deeks
11.September 26th,
2008
5:31 pm I dont think things is as bad as bush and
company say.
1. no loans not true homes are being bought.
2.no fall out today market up.
3.only thing happing is company’s want to save money so there laying off (then work the people they keep long hours six day’s
a week.
4.Real Estate loans are to high and they
dont want to close any deal’s.
5.no bail out fund the F.D.I.C. and that is all
let them work out there on mess.
5.
— Posted by R.L. Halterman
12.September 26th,
2008
6:09 pm Wachovia is DOA. Citi is a dying bison that needs to be shot in the head. We are about to emancipate ourselves from the Capitalist bugger!!
— Posted by TuffeNuff
13.September 26th,
2008
6:41 pm The Republican Party has been preaching the benefits of the free market for decades; let’s call their bluff. No bailout, allow the large banks and financial institutions to fail and enable a more prudent financial system to grow in its place.
— Posted by Bob
14.September 26th,
2008
7:18 pm Silly question:
Would it be possible to ballpark how much would it cost to use Gov. money to ensure the loans taken by the people in the subprime category? If the default in the mortgages is avoided the stocks related to the subprime market would rebound.
Maybe that would be chipper than the 700bn?
— Posted by Vlad
15.September 26th,
2008
9:31 pm The Swedish resolution to their banking, real estate problem is based on having a common culture and outlook for a country, which the United States does not.
All the political might in Sweden worked together even though they did not agree on all terms of the situation BUT did agree that letting the country’s future go down the drain was not something anyone wanted.
In the United States that mutual feeling of citizenship does not exist.
— Posted by Warren
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Actually as a former lawyer, I can tell you that the IRS is much more forgiving than most people think. You and everyone has the one time ability to settle your IRS debts for fractions on the dollar after filling out the paperwork on their website. I know this to be a fact as I had a serious
problem in the 1990's and they settled with me for approximately 3 cents on the dollar. So, pay your taxes of course but understand the laws of the land still protect the folks who get into these once in a lifetime difficulties.
I found them to be very compassionate to my story and spent extensive time with them on the phone once my appeal was received. I was and am deeply grateful for their second chance. You don't need a lawyer or outside help to do it...just follow the instructions on their website.
After all they want to preserve tax payers and not destroy them. And yes I do have old ties to our Federal government
and yet even I could turn to them in a moment of crisis.
You make some fine points about the liquidity issue that short sales are supposed to provide. They provide no liquidity actually when they hammer a stock down in unison. They pocket the difference and walk and take the common shareholders money with them. I feel no sympathy for hedge funds whatsoever and wished they would be heavily regulated or simply put out of business alltogether. It is the province of the ultra-rich by and large and smart financial sharks. I also think they were in part behind the recent oil spikes we have seen with their endless speculating they were doing.
I do disagree with your points on the IRS as I recently read
an article that most of their audits were targeting those with incomes above $150-300,000 per year. That is where the abuses often take place. I once went thru an audit and had to pay an extra $89 after 5 hours of their time or perhaps more behind closed doors. It was not worth the bother but what triggered it was buying 3 homes in the space of one year.
Oh yes, the Lehman fallout had ramifications which were greater than they imagined at the FEDS. Worldwide that is
very clear now. An AIG failure would have been worse.
The government bailout should help the MBS assets which Lehmans holds to have more value but I still don't think receiving .65 cents on the dollars will save Lehman. They were too highly levered to the point where just a 5% decline
in asset valuations would tilt them towards a negative net worth. Had they maintained the standards of many institutions and limited themselves to a 10:1 leverage position instead of
going 30:1 they would still be a viable player.
It was grossly negligent and risky behavior employed by Robert Fuld and the Lehman board of directors in conjunction with key
management. They played the whirlwind and have now reaped its
wrath.
The root cause of AIG's woes has been Credit Derivative Swaps
(CDS) and that has to do with the complex financial instruments which AIG used to insure clients from the possibility of mortgage backed securities (MBS) from defaulting.
With the government stepping up to buy the MBS now that will definitely ease the claims which AIG has been experiencing as of late. It is difficult to say if the CDS they have in place will "transfer" to the paper the FEDS are buying. If it does
then we may not experience much relief as up to 6.5% of all home mortgages are now 30 days deliquent or more (WSJ 9-20-08).
This is an article from the New York Times touching on the issues:
http://www.nytimes.com/2008/09/21/business/21econ.html?_r=1&hp&oref=slogin
More Lehman fallout in Asia:
http://www.reuters.com/article/topNews/idUSPEK7193220080921
WSJ reports employees of a German Central Bank transferred
$470M to Lehman after they filed for BK protection. The matter is under investigation by the German government and has created a storm of "stunned disbelief". I would say some heads will roll in Germany.
Normura interested in Lehman European operations 9/21/08:
http://www.reuters.com/article/newsOne/idUST7120320080921
Thanks for the interview info. Trying to decide whether I want more of the common AIG or more of AVF. This article from Bloombergs on the aircraft leasing biz worth an est. $7-14B.
Might be an employee spin-off and buyout:
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AIG Plane Unit Draws Down $6.5 Billion Credit Line (Update2)
By Erik Holm
Sept. 19 (Bloomberg) -- International Lease Finance Corp., the airplane-leasing company owned by American International Group Inc., said it is borrowing $6.5 billion in emergency funding, the maximum amount allowed under its three credit lines.
The cash, coupled with revenue from operating activities, will be ``sufficient to meet its debt obligations into the first quarter of 2009,'' the Los Angeles-based company said in a regulatory filing.
``ILFC needs liquidity to survive, and this is its final source of liquidity,'' said David Havens, a credit analyst at UBS AG in Stamford, Connecticut. ``This ups the volume on the need for ILFC to be sold to a well-financed buyer.''
ILFC asked its lenders for the cash on Sept. 16, the day New York-based AIG agreed to give the government an 80 percent stake of itself in exchange for an $85 billion loan. Edward Liddy, the new chief executive officer of AIG, the largest U.S. insurer, is looking to sell units to pay back the government.
Credit-default swaps on ILFC fell 97 basis points to 645 basis points, according to CMA Datavision. The derivatives, which banks or credit investors use to hedge against losses or to speculate on a company's creditworthiness, rise as confidence deteriorates.
Contracts on the Markit CDX North America Investment Grade Index, linked to the bonds of 125 companies in the U.S. and Canada, dropped 30 basis points to 150 basis points in New York, according to broker Phoenix Partners Group.
Commercial Paper
ILFC drew on the lines to ``provide it with liquidity to repay its commercial paper and other general obligations as they become due,'' the leasing company said. The first of the credit lines is to be repaid by October 2009, the regulatory filing said.
AIG's unit that makes home and auto loans, American General Finance Inc., said today in a separate filing that it borrowed $4.58 billion under its credit facilities, and said it too asked for the money on Sept. 16.
John Leahy, chief operating officer of No. 1 aircraft maker Airbus SAS, said he has no concern about ILFC's creditworthiness. The credit line makes him confident ILFC, Airbus's biggest customer, will take delivery of the planes the company has ordered, he said.
``We haven't seen anything that fundamentally changes expectations for financing and delivering our backlog, including our backlog with our leasing customers,'' said John Dern, a spokesman for Chicago-based Boeing Co. ILFC is one of Boeing's largest customers with 102 aircraft on order, which is 2.8 percent of Boeing's total backlog of 3,696 planes.
Profits Rise
Second-quarter operating income from the insurer's aircraft leasing unit rose 85 percent to $352 million as the company expanded its fleet and charged more to rent planes. AIG, the industry's biggest lessor by aircraft value, got 4.3 percent of its revenue last year from the business and more than 80 percent from property-casualty and life insurance operations.
Leahy said he expects Steven Udvar-Hazy, the CEO and founder of ILFC, to try to buy back the company from AIG. Udvar-Hazy didn't return messages seeking comment.
AIG shares gained $1.16, or 43 percent, to $3.85 at 4:15 p.m. in New York. The insurer declined 93 percent this year on writedowns of credit-default swaps tied to U.S. home loans.
A basis point on a credit-default swap contract protecting $10 million of debt from default for five years is equivalent to $1,000 a year.
AIG should sell the plane unit, with has ``minimal synergies'' with insurance, Bank of America Corp. analyst Alain Karaoglan said before the federal takeover. The unit could fetch $7 billion to $14 billion, he said at the time. Liddy's predecessor at AIG, Robert Willumstad, had ruled out selling the business.
To contact the reporter on this story: Erik Holm in New York at eholm2@bloomberg.net.
Last Updated: September 19, 2008 19:45 EDT
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Actually they did have to fail utterly when they put hundreds of billions into MBS and leveraged themselves by more than 40:1. The Koreans wanted them but the Korean central bank would not buy off on the risk. Then Barclays wanted the whole enchilada but could not get any backstop from the FEDS and their balance sheet could not stand the cash reserves they would need to put in place per English regulators. In short there was no one in the world who would step up to the risks that Fuld took on including the US government. It has been toast for at least 6 months and those who figured this out and
what would happen made out hugely with their shorts.