AIG might pay back $170 billion of its $182 billion bailout.

Image by Getty Images via Daylife

Here is a great article from Slate written by Daniel Gross, a writer from Newsweek. Definitely worth a read.

A quick except:

"When you look at the financial markets as a whole, the post-crisis bailout efforts have worked out better than expected. Many of the financial market guarantees were lifted without having been used, and the Treasury is turning a profit on the central component of the TARP. But AIG has so far loomed as a gigantic rebuttal to the optimists, a symbol of everything that went wrong.

But it turns out that the efforts to prop up AIG are also working out much better than expected. AIG still owes the Fed and the Treasury a combined $127 billion. But—surprise!—AIG is paying a lot of its debts back. And there's a not too far-fetched scenario in which we come close to breaking on our reluctant investment in the company."

Want to know how? Read the full article here: Here's a surprise: AIG might pay back $170 billion of its $182 billion bailout.

Related articles by Zemanta

• Why the government should have nationalized AIG (blogs.reuters.com)
• Financial Innovation: What Is It Good For (II)? Credit Default Swaps (tpmcafe.talkingpointsmemo.com)

AIG reveals who we are bailing out

Image via Wikipedia

Confused? We all are. Read this to learn what Financial Derivatives are.

Severe valuation losses on the super senior multi-sector credit default swap portfolio of AIG Financial Products Corp. (AIGFP) triggered collateral provisions in the swap contracts, creating a liquidity crisis for AIG in September 2008. The Federal Reserve Bank of New York (FRBNY) provided an emergency $85 billion loan to AIG to meet short-term cash needs. The aid received by AIG helped avoid severe financial disruptions by providing liquidity to important financial institutions and municipalities.

Using funds from the emergency loan, financial counterparties listed on Attachment A (all attachments are posted online at http://www.aig.com/Related-Resources_385_136430.html ) received a total of $22.4 billion in collateral relating to CDS transactions from AIGFP between September 16, 2008 and December 31, 2008. This amount represents funds provided to such counterparties after the date on which AIG began receiving government assistance. The counterparties received additional collateral from AIG prior to September 16, 2008.

Related articles by Zemanta

• Kohn Takes Beating for the Boss Over AIG (blogs.wsj.com)
• Just Gets Worse (talkingpointsmemo.com)
• AIG set to unveil record 60bn quarterly loss (telegraph.co.uk)