Another Resort Trip for AIG
Executives at the financially-hemorrhaging American International Group Inc. got caught at another high-priced resort last week by television news crews in Phoenix -- weeks after the company was skewered on Capitol Hill for a similar $443,000 weeklong retreat at the St. Regis Resort in Monarch Beach, Calif.
The insurance giant reported a $24.5 billion quarterly loss yesterday, The Post's Zachary A. Goldfarb reported. Those record losses come on the heels of a government-extended $85 billion loan to AIG in September, followed by $38 billion more in October as the company teetered on collapse.
AIG has asked for and received another $40 billion from the government's discretionary fund.
"The government's experience in addressing the financial troubles at Fannie Mae and AIG offers a cautionary tale at a time when Washington is debating whether to extend the federal umbrella to Detroit automakers and other beleaguered firms," The Post reported.
Robert Eisenbeis, chief monetary economist at hedge fund Cumberland Advisors and former director of research at the Atlanta Fed, told Bloomberg that taxpayers are "keeping the zombie alive."
With lingering troubles at AIG and other firms, the federally-sponsored Wall Street bailout, initially priced at $700 billion to save a host of troubled mortgage lenders, investment banks and firms, now appears to be only the tip of the iceberg.
When combined with other government relief efforts, the figure climbs close to $2.5 trillion, according to Bailout Sleuth, a website that is tracking the funding.
Fannie Mae, which was seized by the federal government and placed in a conservatorship Sept. 6 along with Freddie Mac, said it might need more than the $100 billion in funding originally pledged by the U.S. Treasury to stay alive, Bloomberg reported.
The Washington-based Fannie Mae reported a record $29 billion loss in the third quarter.
"This commitment may not be sufficient to keep us in solvent condition or from being placed into receivership," the company said in a filing with the U.S. Securities and Exchange Commission.
If approved, Fannie Mae would draw from a special $100 billion fund the federal government set aside in September, The Wall Street Journal reports, eating heavily into the account.
Meanwhile, the Fed granted American Express Co.'s request to become a bank-holding company, allowing the firm to accept deposits and access financing from the government.
As consumers have had increasing trouble paying their bills, American Express' third-quarter profits fell 24 percent. Last month, the fourth-largest U.S. credit card lender announced it would cut about 7,000 jobs, or 10 percent of its worldwide work force, in order to save itself.
By Derek Kravitz |
November 11, 2008; 4:11 PM ET
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Posted by: ripvanwinkleincollege | November 11, 2008 6:12 PM