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Rachel Choi

U.S. lawmakers fault states for AIG collapse - 0 views

www.stateline.org/...story

AIG lawmakers

shared by Rachel Choi on 11 Jan 11 - No Cached
  • The lawmakers wrote that the $85 billion federal bailout of AIG was proof that Congress should approve their two-year-old legislation to strip states of their authority to regulate insurance companies
  • The proposal has split the insurance industry; large companies generally endorse it while small insurers generally oppose it.
  • Without such a change, the four lawmakers warned, “it is likely that the federal government (ie. the American taxpayers) will be forced to pay for more bailouts in the future.” They argued that the bailout of AIG, a holding company with 71 subsidiaries that operate under state laws, shows the oversight job has become too complex for states alone.
  • Rachel Choi on 11 Jan 11
     
    Extra information on how AIG changed the insurance industry
Rachel Choi

Information about AIG - 0 views

www.aig.com/about-aig_20_19308.html

shared by Rachel Choi on 11 Jan 11 - No Cached
  • is the leading international insurance organization with operations in more than 130 countries and jurisdictions. 
  • Rachel Choi on 11 Jan 11
     
    Just basic information about AIG's purpose
Charles Han

Citigroup's financial crisis is emblem of capital drought - 0 views

www.chinadaily.com.cn/...content_7398841.htm

shared by Charles Han on 11 Jan 11 - No Cached
  • Charles Han on 11 Jan 11
     
    Description of what happened with Citigroup during crisis.
Rachel Choi

New Report Casts Doubt On Government's AIG Investment, TARP | PropertyCasualty360 - 0 views

www.propertycasualty360.com/...overnments-aig-investment-tarp

shared by Rachel Choi on 11 Jan 11 - No Cached
  • Regarding AIG, it says the latest estimates by the Congressional Budget Office, the Office of Management and Budget and the Treasury project losses in the amount of $36 billion, $50 billion, and $45 billion, respectively, although the estimated losses have steadily decreased since the inception of the credit facility.
  • the value of Treasury's substantial investment in AIG and the size of any gain or loss are dependent on many external variables, and "the protracted investment in AIG continues to create significant risks to taxpayers."
  • The report adds that Treasury has invested approximately $47.5 billion in TARP funds in AIG. This investment is comprised of non-cumulative preferred stock in the amount of $40 billion and an equity capital facility under which AIG has drawn down $7.5 billion.
  • ...2 more annotations...
  • Including the $1.6 billion in unpaid dividends, AIG's outstanding TARP assistance equals $49.1 billion, the report explains.
  • AIG must repay $79.1 billion in outstanding debt to the Federal Reserve Bank of New York.
  • Rachel Choi on 11 Jan 11
     
    The protracted investment in AIG continues to create significant risks to taxpayers
Rachel Choi

AIG Settlement: Insurance Giant Agrees To Pay Investors $725 Million - 0 views

www.huffingtonpost.com/...lement-investors_n_649910.html

shared by Rachel Choi on 11 Jan 11 - No Cached
  • Ohio Attorney General Richard Cordray said Friday the latest figure will combine with previous AIG settlements reached with secondary defendants to pay about $1 billion to shareholders, including pensions representing firefighters, police, teachers, librarians and others.
  • The lawsuit alleged anti-competitive market division, accounting violations, and stock price manipulation by AIG between October 1999 and April 2005.
  • The suit alleged that AIG:
  • ...4 more annotations...
  • Committed accounting fraud that culminated in a $3.9 billion restatement in May 2005 that included an array of transactions through which the company artificially boosted its reported claims reserves. Those transactions included allegations relating to a $500 million no-risk fraudulent reinsurance transaction with General Reinsurance Corp. in relation to which one AIG executive and four General Reinsurance executives were found guilty of securities fraud.
  • Divided the market for certain types of insurance by paying tens of millions of dollars in undisclosed contingent commissions to insurance brokers and through bid-rigging.
  • Engaged in stock price manipulation that Cordray called "straightforward," in which AIG executives ordered traders to inflate the company's stock price.
  • In addition to the $725 million announced Friday, the case against AIG also includes several earlier settlements: $72 million with General Reinsurance; $97.5 million with PricewaterhouseCoopers LLP, and $115 million with former AIG chairman and CEO Maurice "Hank" Greenberg and other AIG executives and related corporate entities.
  • Rachel Choi on 11 Jan 11
     
    The compensation AIG has to pay off... (Provides a list of the suit alleged against AIG)
Maja Nakevska

Lehman Brothers Holdings Inc. News - The New York Times - 0 views

webcache.googleusercontent.com/search

shared by Maja Nakevska on 11 Jan 11 - No Cached
  • Lehman Brothers was founded in 1850 by two cotton brokers in Montgomery, Ala.
  • In March 2010, a 2,200-page document laid out in new and startling detail how Lehman used accounting sleight of hand to conceal the bad investments that led to its undoing.
  • The report, compiled by an examiner for the bank, concluded that, among other things, the firm's demise was the result of bad mortgage holding
  • ...3 more annotations...
  • Lehman also used a small company — its "alter ego," in the words of a former Lehman trader — to shift investments off its books
  • The failed investment bank may have cause to sue Goldman Sachs and Barclays for what might be a "fraudulent transaction," according to a portion of the examiner's report unsealed mid-April
  • In May, Lehman Brothers Holdings and a group of unsecured creditors filed a lawsuit against JPMorgan Chase for more than $5 billion, saying it siphoned billions of dollars of Lehman assets, thus hastening its bankruptcy
Maja Nakevska

Briefings - Effective Resolution Arrangements for Failed Investment Banks - 0 views

www.farrer.co.uk/index.php

shared by Maja Nakevska on 11 Jan 11 - No Cached
  • the treatment of monies and assets belonging to the bank’s clients and the open or unreconciled over-the-counter trading positions following LBIE’s collapse.
  • It also examined what can be done to make the process of insolvency itself more effective, and to limit the damage that may be done by a failing investment bank.
  • To this end, the FMLC proposed that the Government should consider what positive measures and/or legal sanctions may be appropriate to keep a failed investment bank’s back office systems functioning after an insolvency
Maja Nakevska

Failed investment bank Lehman Brothers' art collection sells for $US12m | News.com.au - 0 views

www.news.com.au/...story-e6frfmdr-1225929585764

shared by Maja Nakevska on 11 Jan 11 - No Cached
  • FINE art once owned by Lehman Brothers, the investment bank whose collapse kick-started the US economic recession, fetched over $US12 million ($12.66 million) overnight at a Sotheby's auctio
  • which declared bankruptcy in 2008, helping to trigger collapse across global financial markets.
  • "While the Lehman name certainly attracted a great deal of attention, the people who bid today participated because they knew it was good art,"
Maja Nakevska

The Simple Dollar » When Investment Banks Fail, What Happens to the Little Guy? - 0 views

www.thesimpledollar.com/...what-happens-to-the-little-guy

shared by Maja Nakevska on 11 Jan 11 - No Cached
  • the impact it had on individual investors who had used these groups as a means to invest
  • we put that money with an investment house, using them to facilitate our investment into stocks or bonds or real estate or money markets or gold or porkbellies or whatever it is we choose to invest in.
anonymous

Financial Crisis for Beginners « The Baseline Scenario - 13 views

baselinescenario.com/financial-crisis-for-beginners

video detail explanation Beginners AIG CDS financial crisis

shared by anonymous on 01 Dec 10 - Cached
    • anonymous
      anonymous on 11 Jan 11
       
      What CDS really is and why it's dangerous and how it triggered the financial crisis. 
    • anonymous
      anonymous on 11 Jan 11
       
      The reason why the gov't would not let AIG fail even though it didn't lend a hand to Lehman, is that AIG had in possession a large number of CDSs and no one can predict the consequences it can cause the financial market if it defaulted.
  • CDS are one of the things that create uncertainty in the banking sector; a bank may look healthy, but it may be counting on CDS payouts from other banks that you can’t see, so you can’t be sure it’s healthy, so you won’t lend to it.
  • ...3 more annotations...
  • Second, you have the risk that the insurance companies won’t be able to pay. If a financial institution – say, AIG – sold a lot of CDS based on the debt of a particular company – say, Lehman – there is a risk that it won’t be able to honor all of those swap contracts.
  • The cumulative effect of CDS is to spread risk, which sounds good, but to spread risk in unpredictable and invisible ways
  • One of the major reasons why the government refused to let AIG fail – one day after letting Lehman fail – was that AIG was a large net seller of CDS, and if it had defaulted on those swaps no one could predict what the implications would be for the rest of the financial sector.
Sophia Wang

Credit Rating Agency Heads Grilled by Lawmakers - NYTimes.com - 2 views

www.nytimes.com/...23rating.html

agency rating credit

shared by Sophia Wang on 09 Jan 11 - No Cached
  • Conflicts of interest were largely responsible for the disastrous performance of credit rating agencies in assessing the risks of mortgage-backed securities
    • Abdiwahab Ibrahim
      Abdiwahab Ibrahim on 11 Jan 11
       
      "The story of the credit rating agencies is a story of colossal failure," Mr. Waxman said. "The credit rating agencies occupy a special place in our financial markets. Millions of investors rely on them for independent, objective assessments. The rating agencies broke this bond of trust, and federal regulators ignored the warning signs and did nothing to protect the public."
Anna Toronova

BBC NEWS | Business | Q&A: Freddie Mac and Fannie Mae - 0 views

news.bbc.co.uk/7502310.stm

economics fannie mae freddie mac financial crisis

shared by Anna Toronova on 11 Jan 11 - No Cached
    • Anna Toronova
      Anna Toronova on 11 Jan 11
       
      Frannie and Freddie basically bought mortgages from approved lenders (Countrywide, etc) and sold them onto investors. In exchange, Frannie and Freddie provided money to the lenders so people could take out mortgages and buy houses, which they got from the investors (constant cycle)
  • Foreclosure rates have soared In this scenario, the government will guarantee the firms' debts, bring in new management and provide fresh liquidity to make the business less vulnerable to the declining market.
Jonathan Li

The Financial Crisis Timeline - 0 views

timeline.stlouisfed.org

Fed financial crisis Current

shared by Jonathan Li on 11 Jan 11 - Cached
  • Jonathan Li on 11 Jan 11
     
    Another great site to be updated on what's happening from day to day in your subject. This site is run by the St. Louis Federal Reserve, so it definitely has authority!
Jonathan Li

Economic crisis in US - 1 views

economiccrisis.us

Current financial crisis

shared by Jonathan Li on 11 Jan 11 - Cached
  • Jonathan Li on 11 Jan 11
     
    Another great site I've used for my own subject. However, because it deals with all aspects of the American economic crisis, this is a great site for everyone. Also, due to its frequent updates, it's a great place to get the most recent news on your subject.
Jonathan Li

In depth coverage of Global financial crisis from the Financial Times - 1 views

www.ft.com/...global-financial-crisis

financial crisis blame

shared by Jonathan Li on 11 Jan 11 - Cached
  • Jonathan Li on 11 Jan 11
     
    A great site where you can find in-depth analyses of the different players in the financial crisis, including Lehman Bros., Freddie&Fannie, Central Banks, Rating Agencies, & Bear Sterns
Apiraami Pathmalingam

Fed Documents Breadth of Emergency Measures - 0 views

www.nytimes.com/...02fed.html

central banks

shared by Apiraami Pathmalingam on 11 Jan 11 - No Cached
  • Fed Documents Breadth of Emergency Measures
  • the Federal Reserve opened its vault to the world on a scope much wider and deeper than previously disclosed.
  • end of 2008, the Fed had about $1.5 trillion in outstanding credit on its books
  • ...5 more annotations...
  • Without the Fed’s help, he said, “liquidity would have dried up even more than it did, asset prices would have fallen even more than they did, and economic activity and employment would have fallen further and faster then they did.”
  • huge sum that went to bail out foreign private banks and corporations.”
  • forced banks to restrict executive pay and reduce the financial burdens on mortgage borrowers as a condition of its aid.
  • opened swap lines with foreign central banks, allowing them to temporarily trade their currencies for dollars to relieve pressures in their financial markets
    • Apiraami Pathmalingam
      Apiraami Pathmalingam on 11 Jan 11
       
      This shows that Fed was trying pull back all the money back into the country
  •  Without the Fed’s help, he said, “liquidity would have dried up even more than it did, asset prices would have fallen even more than they did, and economic activity and employment would have fallen further and faster then they did.”
  • Apiraami Pathmalingam on 11 Jan 11
     
    This article covers alot information about alot of the business and commercial bank. It says what the FED did during the crisis to help them.
Anna Toronova

Elements of a Crime: Actus Reus & Mens Rea | SchoolWorkHelper - 0 views

schoolworkhelper.net/...of-a-crime-actus-reus-mens-rea

criteriaforjudging

shared by Anna Toronova on 10 Jan 11 - No Cached
  • Actus Reus can be a physical act (hitting someone), a failure to act (watching someone being hit), or a state of being (having stolen property in your possession).  It must be shown that a person committed an act prohibited by law.
  • Mens Rea is the mental element of a crime. It includes motive, intent, knowledge, and recklessness/carelessness.
  • due diligence; meaning that the accused made every effort to avoid committing the crime.
  • Anna Toronova on 10 Jan 11
     
    Criteria for Judging Defendants: -Actus Reus (Action: physical act; failure to act; state of being) -Mens Rea (Motive, Intent, Knowledge, Recklessness, General and Specific intent) -Due diligence (did the accused make every effort to avoid committing the crime?)
Maja Nakevska

FDIC willing to oversee failed investment banks | Reuters - 0 views

www.reuters.com/...idUSWBT00920420080618

shared by Maja Nakevska on 10 Jan 11 - No Cached
  • the FDIC board will soon consider proposals on how to treat a bank's derivatives and other financial contracts in case it fails
  • The proposals would likely require banks to maintain specific information on so-called qualified financial contracts,
Paul Huynh

New Century Financial Corporation - Bernstein Litowitz Berger & Grossmann LLP - 2 views

www.blbglaw.com/00046

New Century Financial Corporation Case

shared by Paul Huynh on 10 Jan 11 - No Cached
  • Throughout the Class Period, defendants artificially inflated the price of the Company's securities through false and misleading statements concerning the significant risks associated with its mortgage lending business.
  •  In essence, New Century admitted to overstating its financial performance by maintaining inadequate reserves to cover the bad loans for which it was liable.  Subsequently, the Company admitted that its financial statements for prior periods were similarly misstated.
Anna Toronova

YouTube - Financial Derivatives: What are They? - Housing Bubble Collapse - Unregulated... - 0 views

www.youtube.com/watch

economics financial crisis financial derivatives

shared by Anna Toronova on 14 Dec 10 - Cached
    • Anna Toronova
      Anna Toronova on 10 Jan 11
       
      AIG was overall successful except in one sector, which was deregulated by the government. When AIG went belly up, all other sectors had money to back up insurance except for the sector that was insuring subprime mortgages- 400 billion dollars in insurance on bets whether people would be able to pay their mortgages; people had a Utopian view on subprime mortgages; AIG was operating under Utopian view and felt like housing prices would never drop <- willful blindness!!
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