08 October 2008

High Plains Grifters.

It's funny how AIG never complained about the mark-to-market rule while it was making them tons of phony money, but once the economy soured and they did nothing about it other than booking spa retreats in exclusive resorts, they're trying to blame the rule for their own poor oversight. Here's a summary of ousted CEO Martin Sullivan's attempt to cast blame on regulation:
Sullivan said that when credit markets seized up, AIG was forced to mark its $70 billion in CDO swap positions at "fire-sale prices" even though it believed the positions would have much higher values if held to maturity.
Yeah, I feel for you. Even though my morale wasn't being pumped up by a nearly half million dollar retreat on the taxpayer's dime, I too can understand how it sucks to have to report on real value instead of what you "believe" should be. I remember trying to get a home loan based on my belief that I'd find a sack of money in the next few months that would allow me to pay off the loan while supporting my crack habit and stable of women too high priced for Eliot Spitzer.


JES said...

I'd never even heard the term "CDO swap" until watching 60 Minutes the other night. Talk about a weasel deal: Here's an insurance policy to cover your gazillion-dollar investment. Thank you for your prompt premium payment! [time passes] You, uh, you LOST the investment? and you want us to cover it because of some insurance policy we sold you? You do understand, don't you, that we couldn't actually COVER the gazillion dollars...?

But they can't call it insurance because then, of course, they'll be subject to regulation. So they make up a new term for it.

cuff said...

Jes: And regulation, in the eyes of AIG execs, is the enemy. That's why they had to skirt it in order to make foolish, get-rich-quick-scheme style "investments" (I can't even call it an investment with a straight face). Your summary is dead on. I wish I'd written that.

Washington Cube said...

Agreed. Or ah-grrrd.