AIG bailout: half trillion exposure for taxpayers

If I read this figure properly, US taxpayers could be on the hook for as much as $513 billion dollars of CDS insurance issued by its 377 person AIGFP (financial products) unit in London. Note also the compensation paid to the unit since 2001. Not bad! (Click for larger version; from NYTimes.)



Of course, half a trillion is a worst case scenario. So far, government bailout funds paid to AIG have been re-gifted as detailed below. Over $35 billion went to foreign banks. US taxpayers go the extra mile to save the financial system!

NYTimes: ...Financial companies that received multibillion-dollar payments owed by A.I.G. include Goldman Sachs ($12.9 billion), Merrill Lynch ($6.8 billion), Bank of America ($5.2 billion), Citigroup ($2.3 billion) and Wachovia ($1.5 billion).

Big foreign banks also received large sums from the rescue, including Société Générale of France and Deutsche Bank of Germany, which each received nearly $12 billion; Barclays of Britain ($8.5 billion); and UBS of Switzerland ($5 billion).

AIGFP was headed by Joseph Cassano. See earlier post Clawbacks, fake alpha and tail risk for more details. So far I nominate Cassano as the king of fake alpha.

"It is hard for us, without being flippant, to even see a scenario within any kind of realm of reason that would see us losing one dollar in any of those transactions.'' -- Joseph J. Cassano, a former A.I.G. executive, August 2007