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 With American International Group Inc. (NYSE:AIG) continuing to be dragged down by its massive credit default swap exposure, politicians are ratcheting up the pressure on the company and the Federal Reserve to reveal the identities of the counterparties being made whole by the insurer's three bailouts.
Downgrades that trigger multisector CDS contracts AIG issued have been allowing its counterparties to demand billions in
new collateral as protection from default on collateralized debt
obligations. After the first AIG bailout, those counterparties received
$37.3 billion. Then AIG and the Fed began unwinding the swaps.
According to MarketWatch:
Since then, AIG and the Federal Reserve Bank of New York have unwound most of these contracts. To do this, they offered to buy the CDOs that were originally insured by the agreements. The counterparties sold these assets at a discount, but were compensated in full in return for allowing AIG to extricate itself from the obligations. The counterparties also got to keep the $37.3 billion in collateral, according to The Wall Street Journal. The counterparties have never been disclosed publicly. However, banks that sought and received collateral from AIG included Goldman Sachs, Merrill Lynch, UBS AG, and Deutsche Bank AG The Wall Street Journal said in November.Now politicians such as Senators Mark Warner and Ron Wyden, unhappy about the numerous high-profile AIG bailouts, want to know exactly who benefited from the government's help and why there was no discount on the purchase of the CDOs. The swaps remain at the heart of AIG's problems. The same day that the federal government added $30 billion to keep AIG afloat, the insurer said in a filing that another downgrade would trigger $8 billion in new collateral and termination payments to counterparties, which would render it insolvent without more cash from the government or other sources. - George White See MarketWatch story See Dealscape post on AIG downgrade worries CategoriesComments
From: Big Joe,
Here is who I know to be AIG FPC (Stamford) CDS counterparties: Deutsche Bank
Posted on:
March 6, 2009 5:30 PM
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No mystery at all: JPMChase; Morgan Stanley; Goldman likely cover most of the names. If Dimon was in on $2/share BearStearns rescue, why not here, with more to be 'recouped'?