AIG asking for more; The banks all want more 100’s of billion more.

Nov.08, 2008 in Market Outlook

GM needs 75 billion more this year. AIG wants who knows what next. The banks all want more 100’s of billion more. The other insurers want bailout money. The major home builders want bailout money. This is insane.

SAN FRANCISCO (MarketWatch) — American International Group Inc. reportedly is seeking a new bailout from the U.S. government less than two months after the Federal Reserve came to the insurance giant’s rescue with an $85 billion loan, according to a published report.

The FT said talks might still collapse, but noted that the insurer was pressing for a decision before it posts third-quarter results on Monday.
American International Group Inc. is expected to report third-quarter loss of 90 cents a share, according to analysts surveyed by Thomson Reuters.

Leading industry analysts have said that turmoil in equity and credit markets has been hampering AIG’s efforts to sell some of its businesses, a crucial part of the insurer’s plan to repay billions of dollars in expensive government loans.

Rival insurers that may be considering bidding for AIG businesses are now facing their own problems as slumping stock prices and wider credit spreads cut into capital, Andrew Kligerman of UBS wrote to investors about a week ago.

That’s slowing what investors hoped would be fast asset sales by AIG, possibly preventing the insurer from quickly repaying the Federal Reserve’s loan, the analyst wrote.

Wider credit spreads may be triggering more demands for AIG to post collateral to support the credit default swaps it wrote. That likely increases the amount of money the insurer has to borrow from the Fed, which, in turn, means even more asset sales, the analyst explained.

Kligerman said he expected that AIG would take about $25 billion in write-downs on its credit default swap exposures when the insurer reports third-quarter results.

http://www.marketwatch.com/news/story/AIG-talks-government-over-new/story.aspx?guid=%7B92C4EF08%2D68EA%2D4E4B%2D908E%2D36DDE1BD2E55%7D#comments

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