And the AIG Coverup Continues
It is truly sad that our media is so bought and sold by the ‘powers that be’ and that we have to get good information from foreign sources.
And BTW Obama, ‘stablization of the markets’ is only occurring because your economic team and your AG refuse to address the fraud that occurred(and is probaly still occurring); please don’t tell us you really care about the public when you don’t pursue the fraudsters and seek compensation for all that have lost their 401K monies and property.
Here is a report on AIG that indicates it was a doomed company even before it got deep into CDS’s.
The report certainly has the gravitas to be believed but nowhere is such being reported by the U.S. media.
"As evidence of dishonesty, Whalen points to AIG’s occasional habit of using secret agreements to falsify financial statements — either its own or those of other companies. In 2005, a former senior executive at the insurer General Re (-think Warren Buffet when you think General RE-) pleaded guilty to a conspiracy to misstate AIG’s finances, after General Re paid $500m in premiums for AIG to reinsure a nonexistent $500m risk. The transaction was a sham; the only economic benefit to either party was the $5.2m fee paid by AIG for Gen Re’s help.
When the $500m in loss reserves were added to AIG’s balance sheet in 2000 and 2001, Greenberg was able to claim an increase in reserves, when in fact they had declined. “They’ll find ways to cook the books, won’t they?” John Houldsworth, the former executive, said in a recorded phone conversation with Elizabeth Monrad, his chief financial officer. She observed that “these deals are a little bit like morphine; it’s very hard to come off of them”.
Similarly, in 2003 AIG was fined $10m for helping a telecoms company, Brightpoint, hide $11.9m in losses with a “non-traditional” insurance product that AIG offered for “income statement smoothing”. Brightpoint paid $15m in premiums, and AIG refunded $11.9m in fake insurance claims. The ruse allowed Brightpoint to spread its loss over three years, overstating its 1998 net income by 61%. And in 2005, AIG restated five years of financial statements, admitting that they had exaggerated its income by $3.9 billion.
Whalen believes that at some point between 2002 and 2004, AIG concluded that the game was up for secret agreements, and that other methods of enhancing revenue were needed. “The thing I haven’t satisfactorily answered,” Whalen adds, “is whether AIG was so unstable coming out of 2000, 2001, that Cassano was trying to cover up a wounded, dying beast."