This website uses cookies to ensure you have the best experience. Learn more

Aig Decision Essay

600 words - 3 pages

The U.S. government took power of American International Group Inc. in an $85 billion agreement that revealed the concentration of its concerns about the jeopardy. A subside could pose to the financial system. The step marks a dramatic turnabout for the federal government, which had been robustly defy proposals from AIG for an emergency loan or some intercession that would prevent the insurer from falling into bankruptcy. “There's been criticism of the bailout, but it pales when compared to widespread outrage over the $165 million that AIG paid recently in employee bonuses. Republicans have gone on the offensive against the Obama administration, while Democrats are scrambling to recoup the bonus payments.”( Sorkin) The question that everyone is asking is if they have the legal rights to distribute bonuses to ...view middle of the document...

These new measures establish a more durable capital structure, resolve liquidity issues, facilitate AIG's execution of its plan to sell certain of its businesses in an orderly manner, promote market stability, and protect the interests of the U.S. government and taxpayers,” the Federal Reserve said in its statement.” (Karnitschnig)
A.I.G. does not have enough assets to cover its private and government accountability. “The outstanding shares the government doesn’t own are worth only $1.5 billion or so. That means the government’s approximately 80 percent interest, for which it paid $40 billion, is now worth only about $6 billion. Even if A.I.G. does pay back the government’s $60 billion loan and the “bad bank” vehicles break even, the implication is that, at best, a quarter of taxpayers’ $150 billion won’t be coming back. Meanwhile, the insurer still had $92 billion of privately held debt on its balance sheet as of the end of September. If the government were to inject more funds into it as preferred or common stock, taxpayers would be behind those lenders in the long line for A.I.G.’s assets.” (Laughlin and Beales) All suggest that giving the company supplementary cash or security would be tossing good money after bad.

As you can see, AIG made a very bad decision which affected everyone. They did what they did because they thought it was a good thing but it wasn’t. They thought that it was legal so they didn’t think it would be a problem but they didn’t think first and now look in the place we are in now. AIG got a bailout and everyone is hoping that they don’t do the same thing again or no one is going to help them. AIG has to be very careful in the decisions they make from now on.

Other Papers Like Aig Decision

2008 Great Recession - Companies Who Survived and Alternate Methods to Employee Layoffs

4320 words - 18 pages recession, the American people strongly believe that the following groups are responsible for the Great Recession of 2008: Government, Mortgage Companies, Banking Institutions, Rating Companies, and AIG. The Government and the Great Recession. Politicians and the banks wanted deregulation in the banking and investment industries. During The Great Depression of the 1930s, regulation called the Glass-Steagall Act went into effect that separated

Stock Trac Essay

3974 words - 16 pages second stock purchased was the large cap global insurance company, American International Group Inc. (AIG). AIG, which is listed on the New York Stock Exchange, was obtained for 49.75/share. The stock has remained relatively flat, and is currently trading for 49.71/share. AIG currently pays a dividend of .10/share; however our portfolio has not received any dividend payments from AIG at this time. The third stock that was added to the

Rational Approaches to Ethics

2024 words - 9 pages that this alone will not suffice unless it is accompanied by the will to do what is right. This can be interpreted in two ways. Firstly, the leader’s ethical approach should be underpinned by the intent to do what is right. It should not be a façade to hide a leader’s self-serving motives. Secondly, after the leader has reached a decision he deems as right, he must have the will to follow through on his decision. Inaction would render the

Business Ethics

2450 words - 10 pages Running Head: BEHAVIOURAL BUSINESS ETHICS Understanding Ethical Behavior and Decision Making in Management: A Behavioural Business Ethics Approach David De Cremer Rotterdam School of Management, Erasmus University London Business School Rolf van Dick Goethe University Frankfurt, Germany Ann Tenbrunsel Notre Dame University, Mendoza College of Business, USA Madan Pillutla London Business School J. Keith Murnighan

Ethic in Accounting

1428 words - 6 pages ethics in accounting practices. In this paper, I will bring a thorough discussion of how to make accounting behaviors become more ethical. Ethics in Accounting is what we really need to take into our consideration in this era, especially after the financial and accounting failures of many big firms such as Enron, WorldCom, AOL, Global Crossing, Tyco, Lehman and AIG. As a matter of fact, experts and analysts are trying to find out the root

Uae Economy

1537 words - 7 pages estimates). Abu Dhabi, which is known as the driving force in economic, political and decision making process, account for about 90 percent of the oil production, and oil contribute 56% of the entire GDP of the emirates. Dubai is actually the main responsible for the remarkable growth witnessed in the majority of the UAE non-oil sector, Dubai serves as the financial hub in the whole middle east, with commerce, transportation, services and tourism

Lockheed Tri Star Case Write Up

1913 words - 8 pages of NPV analysis in capital budgeting. We examined the decision to invest in the Tri-Star project by forecasting the cash flow associated with the project for a volume of 210 planes. We also asked what a valid estimate of the NPV of the Tri-Star project at a volume of 210 planes as of 1967 would be. We found this to be -$584 M. This was clearly an unacceptable NPV for capital budgeting on the project. A break-even analysis revealed that the

The Collapse

2002 words - 9 pages arguing about how it was the government’s decision to not help this investment bank that sent the economy into the “great recession”. It is known though, that even though the Lehman Bankruptcy alerted investors of the problem in the market place, it was not the main reason of how this crisis happened. The real reason was the decision that the regulators made in helping Bear Steams a much smaller competing investment bank than the Lealman investment

Th Emozal Project

2432 words - 10 pages  the  Nigerian   Brady  Bond  Yield.       CAPM  &   CAPM  &   CAPM  &  BRADY  &       CAPM   INFLATION   BRADY   INFLATION   With  Beta  Asset(0.78)   9,35%   7,09%   14,65%   12,39%   Decision   Accept   Accept   Reject   Accept                                           CAPM  &   CAPM  &   CAPM  &  BRADY  &       INFLATION   BRADY

Leadership

2248 words - 9 pages is also the title of his biography. It takes a big heart to give a $100 Million company away to people who are not even related to you. Moore's decision was a product of years of planning and of a lifelong commitment to ethical conduct. You have CEO’s of AIG and Countrywide who made $500 Mil each and ran the company into the ground leaving thousands of employees in devastation and hardship. In times when CEO’s are more concerned about their

Effective Ethics and Crisis Management

1962 words - 8 pages , and customer services. The team should develop a sample press releases and meet at least once a year. During the meeting they should discuss and role play scenarios of events that could happen. The events should fall within four categories: Acts of God, Mechanical Problems, Human Errors, Management decision or indecision. This will aid in getting ready before the crisis hits. In remembering the priorities of the company safety must come

Related Essays

Aig Bailout Essay

812 words - 4 pages opinion that the Government was wrong in bailing out AIG and that certain executives and directors of AIG were acting irresponsibly, I am not sure that it amounted to criminal misconduct. AIG and Joe Cassano saw an opportunity to make money in a part of the American banking system (credit swaps, derivatives, etc) that was exposed and unregulated. It was a bad business decision but was it criminal...i think not. We will continue to have such

Should The Top Executives Of The Major Banks That Received Bailout

886 words - 4 pages executives enjoyed an exclusive, all expenses paid retreat at a resort in California. AIG allegedly spent $440,000 for its executives, $200,000 for rooms, $150,000 for meals and $23,000 for the spa. (Sullivan 2008)Another poor decision that appears to have been made by top officials at AIG is paying back their top trading partners at 100% on the dollar. The problem is that those partners (Goldman, Bank of America, Merrill Lynch, UBS, JPMorgan

Ethical Issues Essay

712 words - 3 pages manager makes the right decision within an organization. If unethical behavior or code of conduct is present within an organization employees may feel that behavior is welcome and awarded. Subordinated would than lose respect for upper management within the organization. What individual influences impact ethical behavior? In our text the author teaches about the model of individual ethical behaviors and how a person has a unique set of

Brief History Of Fed & Public Management Issue

2063 words - 9 pages extent, it is understandable that there is a need of private sector expertise in the regulatory agency so that it can effectively regulate the industries. But the argument fell flat when AIG appeared on the radar as the potential candidate headed to the bankruptcy court. After the Lehman Brothers’ collapse and its shock reverberating throughout the international financial industry, it was evident that AIG needs to be saved at any cost because of