Hank has managed to grease the requisite regulatory palms to get out from under the thumb of that whole unpleasant AIG business you may have heard about. (Vicious lies!) More importantly, Snowball will not have to worry about being the ward of some stranger during any sort of incarceration for Hank. Bloomberg explains:
Maurice “Hank” Greenberg, who led American International Group Inc. for 38 years until his ouster amid state and federal accounting probes in 2005, will pay $15 million to settle U.S. claims he manipulated the insurer’s earnings.
“This settlement brings finality for Hank,” said Jacob Frenkel, a former federal prosecutor now practicing law at Shulman Rogers in Potomac, Maryland. “A settlement means no admission, no denial, and one day of news. When they fight the charges, every event in the case is another storyline.”
So in addition to avoiding painful and disruptive adoption or dog-sitting arrangements, the daunting prospect of a life of Ruth Madoff-like notoriety (and shame) seems avoidable for Snowball and owner. We are greatly relieved.
Hank Greenberg, Ex-AIG Chief, Pays $15 Million to End SEC Probe [Bloomberg]
Former AIG CEO Hank Greenberg must be feeling a lot like Colonel Jessep. AIG sued Greenberg for his role in canceling a deferred compensation plan for executives and running away with millions of AIG shares which were then sold over time for close to $4.3 billion. After a testy day on the stand yesterday, AIG’s attorney turned up the heat today looking for Greenberg to admit he ordered the code red and broke his fiduciary duty to the executives.
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In a convincing victory for justice, the former CEO of a Gen Re subsidiary was sentenced to the equivalent of a mild warning from a substitute teacher for his part in defrauding AIG investors of $597 million. John Houldsworth pleaded guilty in 2005 to conspiracy to commit securities fraud and then testified on the government’s behalf to help convict 5 other executives involved in the fraud. In light of his “truly extraordinary” cooperation and heartfelt apology, Houldsworth’s sentence was a crushing 2 years probation, $5,000 fine and 400 hours of community service.
Gen Re’s Houldsworth Avoids Prison in AIG Fraud Case [Bloomberg]
Turnabout is fair play. Remember when we laughed at the Japanese for the real-estate deals they took a bath on at the top of the market? Those birds have, it seems, come home to roost as a number of American firms shed Japanese real-estate at distressed prices. To wit:
American International Group Inc. is close to selling its Tokyo headquarters building to Nippon Life Insurance Co., Japan’s largest life insurer, for about $1 billion, a person familiar with the situation said.
An agreement for the 15-story tower in central Tokyo’s Marunouchi district may be announced as early as next week, the person said. Negotiations are continuing, said the person, who declined to be identified because the talks are private.
The property is in the most expensive office district in Japan, next to the Imperial Palace, making a potential sale a benchmark for commercial real estate prices. AIG, based in New York, is selling property and businesses after being bailed out four times by the U.S. government. The company has tapped about $45.5 billion from a U.S. credit line as of last week.
Ouch. That hurts.
AIG Said to Be Near $1 Billion Sale of Tokyo Tower to Nippon [Bloomberg]
We were going to spend some time making fun of the fact that the cost of the fight to seize Snowflake’s not-quite-a-billion-dollar inheritance from AIG’s Hank Greenberg is fast approaching the $120 million paid to AIG employees in Bonuses and other compensation earlier this year, except that latter figure has been revised upward just a bit in the interim- from $120 million to $454 million. Of course, this latest figure has little to do with the accursed AIG Financial Products division (AIGFP) anymore, instead representing “other forms of compensation across all of its businesses” as opposed to “what was paid to executives at the company’s headquarters and high-ranking officials at various AIG units.” But, seriously, what kind of fun is it to say “Quickly approaching the sums spent by AIG on “executives at the company’s headquarters and high-ranking officials at various AIG units”?
AIG’s Bonuses Inflate To $454m [The New York Post]
He’s probably just going to enjoy a quiet evening at home with Snowflake, but that doesn’t mean you can’t help the li’l fella ring in his 84th by starting a letter writing campaign to your congressmen and local media outlets encouraging them to get the word out via megaphone that none of this AIG shit was his fault, and lobby Oprah, who’s been holding out on having him on, to let Big G clear his name.
We understand that the word “billion” has lost a good deal of meaning around here lately. Be that as it may, some statistics that contain the word are still useful (at least for entertainment value). To wit:
The Federal Reserve took on more than $74 billion in subprime mortgages, depreciating commercial leases and other assets after Bear Stearns Cos. and American International Group Inc. collapsed.
In its biggest disclosure of the securities accepted to stabilize capital markets, the Fed said yesterday it had unrealized losses of $9.6 billion on the assets as of Dec. 31. The bonds, swaps and notes were taken in from Bear Stearns, once the fifth-biggest Wall Street firm by capitalization, and AIG, which had been the world’s largest insurer.
Oh, and don’t worry about the 13% in losses the Fed has racked up in just over three months. Those are unrealized.
Bear, AIG Dumped $74 Billion in Subprime, CDOs on Fed [Bloomberg]
We suspected, and told you, dear reader, that there was very little that the government could, should or would do. Not only did they do very little, other than nearly incite a riot (including here in the comments sections), but *gasp* AIG employees in all the groups are still actually getting paid- and there are few if any restrictions on those payments going forward.
Steven Davidoff sums it up for us in “We Fought AIG and AIG Won,” which amuses us to no end because it implies that AIG and “The Law” are synonymous- though we doubt Davidoff caught the overt cheer for sanctity of contract implicit in his poorly chosen title.
Just in case you might have forgotten that DealBook is a New York Times venture, Davidoff salts his piece with thinly disguised indignant rage, but the key stuff is here:
The only thing in these agreements (accessible here, here and here) that the Treasury did to pursue these retention bonuses is to deduct the $165 million in total payments from the approximately $183.5 billion made available to A.I.G. In addition, the Treasury charged A.I.G. a commitment fee of $165 million to be paid from the operating cash flow of the company. Since money is fungible, and the government has now agreed to support the company anyway, the latter requirement is meaningless.
How’d you like to be one of the AIG people who bothered to return your bonus now?
We Fought A.I.G. and A.I.G. Won [Dealbook]
The real question is why it took so long. That compensation was, at the very least, out of tune with popular sentiment is quite obvious. Why any number of shifty methods to reign it in were undertaken before the most obvious (fire the executives responsible for compensation, use the Board of Directors or one’s status as a shareholder to press for change) is somewhat beyond us. Handled properly, there is no reason at all to involve, e.g., the United States Congress in dealing with the matter.
A group of investors is seeking to oust an American International Group Inc director who leads a committee it said authorized bonuses to executives that brought the insurer to the brink of failure.
In a letter to U.S. government-appointed trustees for AIG, officials representing large union and public pension funds urged the trustees to block the re-election of James Orr, who chairs AIG’s compensation and management resources committee.
The group said Orr was on the committee when it approved pay and retention awards for executives at the AIG Financial Products unit mainly responsible for the insurer’s distress.
Investors seek ouster of AIG compensation chief [Reuters]
The [AIG] employees were told, “If you agree,” to write checks for $2,100 from themselves and their spouses and to send them to Mr. Dodd’s campaign within four days. They also were to ask the senior members of their management teams to do the same and send copies of their checks to the company.
The Dodd campaign collected $162,100 from AIG-FP employees and their spouses within six weeks of the e-mail, according to data from the Center for Responsive Politics and the Federal Election Commission.
In a way it is a fantastic thing that purely legal transactions of the type enshrined in the First Amendment should give cause for such attention after a legislator acts in a fashion that might (gasp) take account of her constituency that the Washington Post later uses them to skewer the likes of Dodd.
America! Fuck yeah!
AIG chiefs pressed to donate to Dodd [The Washington Post]
Update: I think I failed to express the appropriate level of cynical amusement in this post. I do truly enjoy the perpetual game of whack-a-campaign-mole that the system of political giving in the United States has created. Does anyone else think it would be a good idea to require that campaign monies returned due to scandal be given to the opposing political party rather than some cushy charity? It always rubbed me the wrong way that, as a Senator, your shady contribution collection return/adjustment likely put your name in lights amongst the highest donors for [fill in the blank]. An immediate shift of the funds to the party of your closest contender in the last general election, would make for an interesting disincentive.
Certain networks just attract conspiracy theorists and the theories that these theorists theoretically theorize with the same level of surreal magnetism that acts between big oil and Maxine Waters. That’s not to say, for instance, that Goldman Sachs isn’t totally responsible for spiking oil prices up to nearly $150 a barrel, unleashing law enforcement on Governor Spitzer at a particularly (in)opportune time, sinking Bear Stearns in retribution for that firm’s failure to pitch in to rescue LTCM, and arranging to demoralize Tim “The Safecracker” Geithner and Ben “The Beard” Bernanke by getting them to wear the same tie while attending recent Congressional hearings,* just that smoke and fire may or may not be totally related.
Goldman, at least, appears mostly to have an appearance of quiet (and loud) competence. It is not all that intellectually pressing to imagine Goldman at the center of a plan to irradiate a bunch of gold (see what we did there?) and thereby reduce available supply to spike the price and boost the value of the long positions it may or may not hold in the metal (“Gold-man Sachs-en-fin-ger” even sounds cool when Karaoked loudly to the theme song). But, it seems to us, that this sort of thing begins to collapse in on itself when AIG becomes the supposed criminal mastermind organization at the center of a plot complex enough to involve more than three laptop computers with disparate versions of Windows. So, when we see posts like the one Zero Hedge penned this weekend (“AIG Was Responsible For The Banks’ January & February Profitability”) you can color us skeptical- at least of the conspiracy laden parts. (Not that we do or do not love Zero Hedge, but still). We have no doubt that AIG poured an Imperial Asston of cash into a series of counter-parties in January and February. What, exactly, is mysterious about this?
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