They’re calling it a bailout from the bailout.
Only weeks after insurance monolith American International Group (AIG) received loans of $85 and $38 billion from US taxpayers it wants more.
Seems the interest rate was too high. And the loans aren’t covering business trips to places like the luxe Pointe Hilton Squaw Peak Resort in Phoenix where AIG directors insouciantly sipped drinks on the patio last week before posting yesterday’s $24.5 billion quarterly loss.
And how was your week?
Like Enron, most people had never heard of AIG until it was ruining the economy.
And like Enron it excelled at faux deals like the one in 2000 where Berkshire Hathaway Corporation subsidiary Gen Re agreed to buy $600 million in reinsurance coverage — creating the appearance of a $100 million risk — but secretly AIG agreed to return the fee and pay Gen Re $5 million for its trouble.
AIG also loved to insure collateralized debt obligations (CDOs) because it didn’t have to own the illiquid paper and taint its balance sheet with risk and the CDOs paid face value to credit swappers even if their ratings tanked which of course they did.
Nice work if you can get it — and you’re not the counterparty.
Also like Enron, AIG was blinded by hubris and had risk control models that covered everything except people defaulting on their mortgages — they wouldn’t do that, right? — and parties taking out pox-on-your-head credit swaps on AIG itself. Oops.
But whereas Enron’s Jeffrey Skilling and Andrew Fastow are sequestered at Club Feds–as are WorldCom’s Bernie Ebbers, Tyco’s Dennis Kozlowski and Hollinger press baron Conrad Black– AIG’s founder Maurice “Hank” Greenberg still had $49.6 million of his $1.25 billion in September according to the New York Times.
Despite being ousted as AIG Chairmen and CEO three years ago by the Sheriff of Wall Street, Eliot Spitzer, when he was still Sheriff.
And speaking of landing on your feet, AIG also has something in common with outgoing US Vice President Dick Cheney.
The way it shows gratitude.
After dodging a bullet, AIG’s Sebastian Preil, Jeffrey Malkovsky, John Roberts and friends made French red leg partridges dodge bullets on an $86,000 hunting trip outside of Salisbury, Wiltshire, England in October.
“The recession will go on until about 2011 but the shooting was great today and we are relaxing fine,” the UK site News of the World quotes AIG Frankfurt manager Sebastian Preil quipping as he pulverized partridges at the Stoke Drove shoot. “We have been given $85 billion from the US bank to help us out but we should be on an even keel in two years.”
“It has been a fantastic day,” concurred Hilary James, the general manager of New York’s Bristol Plaza Hotel described by News of the World reporters as a “boisterous lady in her late 40s from Wiltshire [who] was more interested in talking about the birds she’d killed than the economic crisis.”
“We got plenty of shooting in as the weather was fine. We love it here,” she said.
Dick Cheney displayed similar thank-you-and-pass-the-ammo, bloodbath gratitude on the day he and George Bush were re-elected in 2004, commandeering Air Force Two to the Pierre, SD airport for a victory pheasant hunt even before John Kerry and John Edwards’ concession speeches.
Though Dick Cheney hunting jokes had not started yet–the Veep shot hunting buddy Harry Whittington in Kenedy County, TX in 2006 — Cheney shot 70 pen-raised pheasants, at Rolling Rock Club in Ligonier Township, PA in 2003 just one year earlier according to club employees.
Unfortunately, Cheney’s defibrillator machismo which brought us the war in Iraq failed him while shooting upland foes and he was rushed to George Washington Medical Center where he was hospitalized for shortness of breath.
“Sorry we ruined your Saturday,” the Veep’s wife Lynne Cheney told reporters at the hospital where Jay Leno used to joke Cheney had a reserved parking space. Cheney was going to be fine and he got plenty of shooting in, she said.
She could have been speaking about AIG.