Aig Case Study Solution

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Better known as AIG (NYSE: AIG) - What was once unthinkable on September 16, 2008. That day, the federal government took was American International Group, a rescue package of 85 billion dollars. In return, the US government received nearly 80% of the share capital of the company. For decades, AIG was the world's largest insurer, a company known worldwide for providing protection to individuals, businesses and others.
March 19, 2009 - Understanding the AIG Bonus explosion:
Many people are outraged that AIG paid $ 165 million in bonds to borrow up to $ 170 billion in bailout funds from the government. Some death threats, even against its CEO Edward Liddy and his team were given. AIG employees were invited to stay safe and relaxing credit default
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• Citigroup asked a third tranche of state aid.
• Warren Buffet Bershire Hathaway recorded its worst loss in its history book. (Source: Bloomberg, stocks dropped in World March 2, 2009; Bernanke said AIG operated like a hedge fund, March 3, 2009)
AIG bailout of $ 150 billion for revision:
The Fed's US $85 billion insurance giant AIG bail out was revised. The Treasury purchased $40 billion in preference shares as part of its share repurchase program. The Fed bought $52.5 billion in mortgage-backed securities. Funds can avoid bankruptcy for credit default swaps from AIG to retire and protect the initial investment from the government.
The world has been saying since the Sept. 18, AIG bailout, which occurred a day after Treasury Secretary Henry Paulson, not promote bailouts of Wall Street, then moved to Lehman Brothers go bankrupt. It came a week after the government takeover of Fannie Mae and Freddie Mac and rescued six months after Bear Stearns Fed. Back then, we all thought 85 billion ransom was crazy. This was the bank bailout and other measures taken by the Federal Reserve, Ben Bernanke, to strengthen the local economy $700 billion.
Does the Fed Own
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Was Edward Liddy as CEO of AIG to break up and sell the parts to repay the loan. However, no one will buy until market conditions improve. Meanwhile Liddy has to relax billion in credit default swaps.
In return, the Fed loaned AIG $ 85 billionth management is replaced and has veto power over all major decisions, including the sale of assets and payment of dividends.
The plan was to break up AIG and sell the parts to repay the loan. However, the stock market crash in October made impossible because potential buyers requires a lot of money to their own balance sheets.
Conclusion:
AIG's bailout has not come without controversy. Some have criticized whether or not it is appropriate for the government to use taxpayer money to purchase a struggling insurance company. In addition, the use of the public funds to pay out bonuses to AIG's officials has only caused its own uproar. However, others have said that, if successful, the bailout will actually benefit taxpayers due to returns on the government's shares of the company's equity.
No matter the issue, one thing is clear. AIG's involvement in the financial crisis was important to the world's economy. Whether the government's actions will completely heal the wounds or will merely act as a bandage remedy remains to be

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