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AIG's Small London Office May Have Lost $500 Billion

abcnews.go.com — Ground zero for AIG's spectacular implosion, which has soaked up more federal bailout money than any other entity, appears to have been a small London branch office that may have lost nearly half a trillion dollars in bad deals.

Who dugg this? Made popular Mar 11, 2009

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  • crashbang, on 03/11/2009, -0/+72 500 BILLION dollars? How is that even ***** possible? How did no one see the giantic back hole of cash that these folks created months even years ago?
  • JesusSaidSo, on 03/11/2009, -1/+56But they need their bonuses to keep all this 'talent' around!
  • zuiquan, on 03/11/2009, -0/+37What kind of crackheads is AIG hiring over there?
  • trollick, on 03/11/2009, -1/+37Lets face it people. Most of you would never figure out how to lose $500 billion. You need top talent for that. And that's why those people are paid their ridiculous compensations and bonuses.
  • bixby1, on 03/11/2009, -0/+31London's AIG Branch: Redefining the 3 Martini Lunch.
  • louiebaur, on 03/11/2009, -1/+31http://i38.photobucket.com/albums/e107/nitr/59ee9e ...
  • nigelmansell, on 03/11/2009, -0/+21that's what you get for selling CDS
    http://en.wikipedia.org/wiki/Credit_default_swap

    they made a bunch of money in the mid 00's btw
  • Trifold, on 03/11/2009, -1/+21Well they probably did, but it was profitable at the time, so who cares! They made their commissions and bonuses, they're happy.
  • Trifold, on 03/11/2009, -0/+19And again, the inherent flaw in Wall Street's culture of rewarding short term gains over long term growth rears its ugly head. There really isn't enough outrage over this.
  • WHauser, on 03/11/2009, -0/+17These people didn't "lose" the money.. it never existed in the first place. It was all imaginary. The money that was real, though, was the 280 million Cassano walked away with.

    People bought houses they couldn't afford at prices the houses really weren't worth. The bundled mortgages were essentially promisary notes that the consumer would pay x amount, with y interest, over z years (the problem is the consumer never had the money to spend). Still, the lenders get paid based on the imaginary value of the loans. Then AIG steps in and sets up what is, essentially, a casino where lenders and AIG can make bets on the value of the bundled mortgages. Problem is, AIG was betting that the mortgages were worth something when, it turns out, they were worth nothing.

    It's like going to vegas and betting with borrowed money.. when the casino discovers that you can't pay your debt they take you out back and break your legs. I suggest we do something similar with the people at the AIG London office.
  • bono4u, on 03/11/2009, -1/+17"the man who ran the unit for the last eight years retired after making $280 million for himself and leaving with a $1 million-a-month consulting contract"

    so who is going to get the money back? call the marines or whatever special forces you have for the job and bring him to court? But even then if he has 280million he perhaps just sends a check to you patriotic navy seals and they back up ...
  • digghasnoethics, on 03/11/2009, -1/+16Hmm, anyone else smell a rat?

    Why would a small UK office have big losses when the major issue was bad US debt? Could it be that AIG were routing deals via the UK office as some kind of tax or regulatory dodge? Sounds like someone might have been playing fast and lose and what we are seeing is evidence of fraud by the US arm, using the UK office to keep some debts off their books?

    Of course that wouldn't make as good a story for a right wing republican spinner out to fudge things to look bad for continued democrat AIG support.
  • Skuzzlbut, on 03/11/2009, -0/+13that is what pisses me off - that one douche walked away with 280M, and now our tax dollars need to prop that damn place up. The gov should sue for that money back! The IRS has no problem chasing down regular citizens for 1K in back taxes - but NOT 280M????
  • ubitendo, on 03/11/2009, -0/+10What does AIG stand for again -- Association of Ignorant *****?
  • executorzz, on 03/11/2009, -1/+11Holy *****, break up AIG and let the non-insurance related divisions die.
  • Grazzit, on 03/11/2009, -0/+9AIG sold policies to people that took out loans that in the case the loans were not repayable AIG takes over the payments. That is what is going on here, loans are defaulting so they've made a run on AIG, the governement is supporting AIG because if it fails all the other loans have to be redone which could just push this all over the brink.

    just info for you all
  • ferny12, on 03/11/2009, -0/+9Why did we give bailout money to this piece of ***** company again?
  • GrandmaSheila, on 03/10/2009, -1/+10That's $500 billion. We're making the losses good.
  • poidh, on 03/11/2009, -0/+9The branch was in London but the company is American. The bailout money is not saving the London office; it is saving the entire company.
  • tgc1, on 03/11/2009, -0/+9You don't LOSE 500 billion. You deliberately hide it in certain places or transfer it to other people. I'm sorry, but not even GM has lost 500 billion. No operating company has the incompetence to lose that much money. Sorry, not a chance in hell. You could probably hire a bunch of chimps to fling ***** around an office and randomly choose deals to broker, and they STILL wouldn't lose that much money.

    They expect us to believe this *****?

    "Dude, where' the 500 billion?"
    "Oh THAT 500 billion? We kinda lost it..."
    "Ummm...."
  • prophet5, on 03/11/2009, -1/+9It must have been for dental work.
  • buzzben, on 03/11/2009, -1/+9Yet I'm sure a handful of incompetent and/or criminal Executives walked away with hundreds of millions in bonuses, and will never be held responsible.

    Someone should gather their names, calculate the amount of money they've stolen from us, and print it with a picture of the huge mansions they live in and cars they are driving, showing the lavish lifestyle their criminal conduct has yielded.

    Then demand that they give back the money they stole or be prosecuted.
  • ZeeZee2k, on 03/11/2009, -1/+8How much of the $500 billion went to Manchester United?
  • poidh, on 03/11/2009, -0/+7I would imagine that what happened was that they based their business model (of insuring the buying of bundles of US mortgages) on a US housing market which was always rising, so even if someone (or as happened, many people) defaulted on their mortgage, the house could be reposessed and re-sold, therefore meaning that the mortgage insurance would never have to be called in or very seldom. Everyone makes a profit and everyone is happy.
    Until of course the housing market begins to stagnate or fall, in which AIG then had an obligation to pay out billions for the bundles of mortgages it insured which are now worthless.
  • gwaggy12, on 03/11/2009, -2/+9That's what happens when you hire David Brent and Michael Scott to run your branch.
  • method7670, on 03/11/2009, -1/+7AIG should have been allowed to fail.
    If they turn things around they owe us some serious cash.
    I know a pipe dream, but the truth.
  • Moonkeeper, on 03/11/2009, -0/+6They should have hired me to do this guy's job. I would have done better then this guy by simply doing nothing. I'll even take 1/2 his salary. :)
  • Demener, on 03/11/2009, -0/+6I'll put 500 billion on 00, now spin that roulette.
  • absurdist, on 03/11/2009, -0/+6"the man who ran the unit for the last eight years retired after making $280 million for himself and leaving with a $1 million-a-month consulting contract"

    Well, of course. They couldn't have screwed things up this badly for much less.
  • inexion, on 03/11/2009, -0/+5let aig die plz
  • iancgi, on 03/11/2009, -0/+5People wonder how this is possible. Its easy when they are stealing it all, they just make you fools believe they lost it and the worst thing is you believe them!!!!
  • mithrasinvictus, on 03/11/2009, -0/+5It's not like they have to pay it back now or anything.
  • behavedave, on 03/11/2009, -0/+5Who would monitor the activities of these people apart from AIG.

    There was the FSA setup to prohibit the kind of poisonous loans that caused this thing but they would only manage the UK banks.
    Their is an American equivalent but they only manage the activities of American banks probably not their international trades.

    I guess its academic anyway as the FSA and the American equivalent didn't do a thing.
  • Trifold, on 03/11/2009, -1/+6We have to give them money because the government's ignored the financial system under the guise of "capitalism" for so long that the mega-companies are intertwined to the point that if one goes down it could bring down the entire financial system, leading us to this quasi-socialized mess. First rule of Wall Street, privatize profits, socialize losses. Sweet deal, eh?

    As for your second question, yeah probably.
  • poidh, on 03/11/2009, -1/+6I dugg you down first because I am British, but then I dugg you back up because I lol'd.
  • thealsir, on 03/11/2009, -0/+5That's the thing about derivatives. They can turn into mega-huge losses in a short time span.
  • method7670, on 03/11/2009, -0/+5or just let another company do what AIG does, that is the concept of capitalism
  • meyert11, on 03/11/2009, -0/+5I find it hard to believe that such a large and important organization 'looses' money. My bet is that the company began to hire good'ol'boys that then hired idiots so that they could steal the money without getting caught. Who pays in the end, we the tax payer. You gotta love capitalism.
  • tomjowitt, on 03/11/2009, -0/+5Even Richard Pryor couldn't win that bet.
  • TheSwashbuckler, on 03/11/2009, -0/+4The people running AIG obviously have no understanding of what oversight is.
  • Photokon, on 03/11/2009, -0/+4so we should just keep the bubble inflated by magic and the work of every taxpayer through higher taxes? Higher taxes always gives more growth! Don't ya know!

    Oh I forgot, deficits don't matter.
  • LilRabbitFooFoo, on 03/12/2009, -0/+4Or felony charges...
  • ericdano, on 03/11/2009, -0/+4And the office was run by David Brent (Michael Scott US version)
  • MrARPA, on 03/11/2009, -0/+4Judging by Cassano it looks like they were importing them.
  • wonderchemist, on 03/11/2009, -0/+4Think of the skill needed to lose $500 billion! Do you think you can lose $500 billion?
  • mavere, on 03/11/2009, -1/+5OMG, they're FOREIGNERS!
  • tomjowitt, on 03/11/2009, -0/+3That pretty much sums up the banking sector as a whole.
  • inactive, on 03/11/2009, -0/+3nice
    but the last part was the most important part of that rather excellent comment .
  • Lostangel, on 03/11/2009, -0/+3AIG: Flawless Victory! Finish him, er I mean US.
  • inactive, on 03/11/2009, -0/+3at the point of a gun (read IRS)
    `
    but I'm brave,,, I'm free,,, thank you Sr. may I have another ?
    /s
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