Government Declares War On AIG, TARP Recipients (Bloomberg)
The Government has literally gone batshit over this; members from both sides are now planning to introduce legislation that would tax bonuses at 70% for any company that has received federal funds. Geithner went ahead and took it a step further with AIG promising to accelerate the 'wind down' and recoup the money paid out by deducting the money from the next stimulus payout.
Long story short, AIG never pays back all of the TARP money, so it doesn't matter anyway.
Hedge Funds May Get AIG Cash (WSJ)
In essence, while the U.S. government is busy trying to prop up the housing market -- by trying to limit foreclosures, among other things -- it is simultaneously putting up cash that could be used to pay off investors who bet housing prices would tumble and many mortgage holders would default.
The investment strategies involved are perfectly legal maneuvers. Still, the losses show how AIG strayed from its core business: selling standard insurance policies to businesses and individuals to protect against everything from fires to lawsuits. "AIG's financial-products division went heavily into the business of speculation, and its gambling debts are what taxpayers are paying off right now," said Martin Weiss of Weiss Research, an investment consultant in Jupiter, Fla.
Wagoner Softens View Of Bankruptcy (WSJ)
You really have to give it to this guy: he's a master spin artist. In a world where CEO's have started keeping things private until the very last second to then drop them on investors like a 40lb bags of flaming excrement, it's nice to see someone that actually takes the time to lay the ground work softening the general public before major action.
This should also read as a pretty good indicator of the firm's general direction in the near future; they can now call in attorneys and bankers without there being a scandal. AIG/ML and anyone else who is looking to adjust/amend payouts to finance kids in the near future could learn a little from this.
Buffett Called To Action, Investors Want Moody's Reform (NYT)
The Oracle, a 20% stakeholder in Moody's, is facing pressures from his shareholders to do something to fix the company.
Burning it to the ground would be a good start.
"But on the subject of the conflict of interest built into the rating agencies' business model, Mr. Buffett has been uncharacteristically silent -- even though that conflict is especially glaring in his case because one of the companies that Moody's rates is Berkshire. (Its Aaa rating, for the record, is the same as the one from Standard & Poor's. Fitch downgraded Berkshire for the first time last week.)"
GE Capital Loss Lurking In Moscow Loans, U.S. Cards (Bloomberg)
"General Electric Co.'s future may depend on folks like Yelena Zoshchenko.
GE Capital, the financial services unit of the world's biggest maker of jet engines and power turbines, gave the Moscow real estate agent a car loan at a 15 percent interest rate in June 2007. Then the Russian currency collapsed.
"The banks here used to literally grab you by your lapels and ask you to borrow," said Zoshchenko, 58. "But not since the crisis started.""
Lions Gate Hires Team To Defend Against Icahn (Reuters)
"Lions Gate Entertainment Corp has hired an advisory team, including investment bank Morgan Stanley and the law firm Wachtell, Lipton, Rosen and Katz, to launch a defense against financier Carl Icahn, according to two people with knowledge of the matter.
Icahn, who controls 14.5 percent of Lions Gate's shares, is seeking to boost his influence over the Hollywood studio by offering to buy $325 million worth of its convertible notes."