FBI Began Investigating AIG in March

Source: Washington Post

Federal investigators have been scrutinizing American International Group since March, focusing on whether the insurance giant knowingly concealed mammoth losses that helped lead to the company's $85 billion federal bailout this month.

Investigators are interviewing witnesses and examining previous statements and disclosures made by AIG and its former officials, according to two people familiar with the probe. No determination has been made about whether to seek criminal or civil charges, said the sources, who spoke on the condition of anonymity because the investigation is at a delicate stage.

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On Feb. 28, AIG posted its largest quarterly loss ever, blaming complex financial instruments known as derivatives for write-downs of more than $11 billion. Martin J. Sullivan, the insurer's chief executive at the time, resigned in June after AIG suffered another multibillion-dollar quarterly loss on its derivatives connected to defaulting home mortgages.

The company's near-death is largely being blamed on its heavy involvement in a kind of unregulated derivative called credit default swaps, whereby AIG earned hefty premiums in exchange for guaranteeing another company's mortgage investments if the mortgages defaulted. AIG bet that many of the mortgages would never fail, but an unusually high percentage did.



Read more: http://www.washingtonpost.com/wp-dyn/content/article/2008/09/24/AR2008092403589.html

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Former AIG CEO Robert Willumstad has said he is declining his $22 million golden parachute. Wow. What a guy. Personally, I think he should be forced to sell off every single asset he owns and empty his bank accounts to pay back the American people for the cost of bailing out AIG.

This may be happening already.

I just wonder if in some delusional way AIG thinks that putting all the money back in will stop the investigation (or at least criminal prosecution!)

I get so tired of seeing the lame excuses for obscene amounts of executive pay. Historically, there has been very little downside to criminal or blatantly irresponsible behavior.

These AIG executives made the choice to play a very high stakes game with their shareholders' money. The derivative market falls completely OUTSIDE of the regulatory powers of the government, but the government has stepped in to bail them out using taxpayer money. If I blow all my savings and cashed in all my assets on losing lottery tickets will the US government bail ME out?

Sorry for the rant so early in the morning. I am just so sick of it all.