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AIG - American International Group


PlanMaestro

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I think the strongest angle for the plaintiffs is was equity ownership legal?

 

This article written today suggests internal documents reveal even fed officials didn't think it was:

 

Internal Fed Documents Used to Question AIG Bailout -- Market Talk

 

9/30/14, 12:54 PM

13:54 EDT - David Boies is still grilling Federal Reserve General Counsel Scott Alvarez in federal court in Washington, D.C., to build Starr International's case that the government didn't have legal authority to acquire a 79.9% stake in American International Group (AIG) in its 2008 rescue. He cited internal emails, notes and other documents to try to show that Fed officials weren't on the same page in 2008 in terms of the "power" of the New York Fed "to hold" AIG shares. Officials apparently agreed the New York Fed couldn't "purchase" equity. But as one example of the legal wrangling, Alvarez testified: "Purchase is too ambiguous a term." (leslie.scism@wsj.com)

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AIG is down -9.4% since Sept 19. Anyone willing to speculate what caused the drop?

 

Is it...

 

A. General market volatility.

B. Reaction to the lawsuit.

C. Berkowitz selling to meet redemptions.

D. All of the above.

 

?

 

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My vote is for (D).

 

Also, re (B) weird uncertainty in that AIG seems to indemnify the U.S. Government.

 

If it is proven that AIG was coerced by the government then why would it matter they were indemnified. Can I coerce you but make you sign an agreement to indemnify myself and move on?

 

Seems like this is going to be the government paying or no one.

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My vote is for (D).

 

Also, re (B) weird uncertainty in that AIG seems to indemnify the U.S. Government.

 

If it is proven that AIG was coerced by the government then why would it matter they were indemnified. Can I coerce you but make you sign an agreement to indemnify myself and move on?

 

Seems like this is going to be the government paying or no one.

 

I didn't say it would hold up -- just that it's providing uncertainty.

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Guest longinvestor

Bloomberg left out the second part of Buffett's statement that, had the NY Fed not stepped in, AIG would've walked over to the bankruptcy court within 24 to 48 hours after Geithner contacted Buffett. AIG did not have a second choice.

 

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My vote is for (D).

 

Also, re (B) weird uncertainty in that AIG seems to indemnify the U.S. Government.

 

If it is proven that AIG was coerced by the government then why would it matter they were indemnified. Can I coerce you but make you sign an agreement to indemnify myself and move on?

 

Seems like this is going to be the government paying or no one.

 

I didn't say it would hold up -- just that it's providing uncertainty.

 

I don't understand why the lawsuit is relevant for AIG shareholders. They are suing the government, not AIG. Isn't this just noise?

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The lawsuit isn't relevant for AIG shareholders but with all the lawsuits going on people are confused. 

 

I am hoping to get some cheap 2017s in the next few weeks.

 

Forgot E:

 

Aig has a policy covering Kim Jong Un - not looking good right now.....

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I think AIG would be held liable for any payments that US Treasury had to make to Starr.

 

In the 10-K section on risks

 

Starr International Company, Inc. (SICO) has brought suits

against the United States (including the Federal Reserve Bank of New York) challenging the government’s assistance

of AIG, pursuant to which (i) AIG entered into a credit facility with the Federal Reserve Bank of New York; (ii) the

United States received an approximately 80 percent ownership interest in AIG; and (iii) AIG entered into transactions

involving Maiden Lane III LLC. The United States has alleged that AIG is obligated to indemnify the United States for

any recoveries in these lawsuits. A determination that the United States is liable for damages in such suits, together

with a determination that AIG is obligated to indemnify the United States, could have a material adverse effect on our

business, consolidated financial condition and results of operations.

 

Further on in Note 15

 

The United States has alleged, as an affirmative defense in its answer, that AIG is obligated to indemnify the FRBNY

and its representatives, including the Federal Reserve Board of Governors and the United States (as the FRBNY’s

principal), for any recovery in the SICO Treasury Action, and seeks a contingent offset or recoupment for the value

of net operating loss benefits the United States alleges that we received as a result of the government’s assistance.

On November 8, 2013, the Court denied a motion by SICO to strike the United States’ affirmative defenses of

indemnification and contingent offset or recoupment.

The FRBNY has also requested indemnification in connection with the SICO New York Action from AIG under the

FRBNY Credit Facility and from ML III under the Master Investment and Credit Agreement and the Amended and

Restated Limited Liability Company Agreement of ML III.

 

Vinod

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Maybe I'm naive, but I noticed the word 'Could'  in the "...could have a material adverse affect on our business."

 

That's different from saying 'if Starr wins we would be liable and not the government.'

 

My guess is they are just covering their backside.  But, I'm not a lawyer or a specialist in this arena.

 

 

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I think the language implies they disagree with the scope of the indemnification and will fight it, if it comes to that (though they may not win).

 

Why should current AIG shareholders pay for the previous AIG shareholders.... That doesn't make sense. ::)

This is facetious right?

 

I just want to assess how likely this will happen to AIG and how much damage it could occur.

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