Coping with Financial and Ethical Risks at American International Group (AIG). Abstract American International Group‚ Inc. (AIG) reported bogus transactions that hid losses and inflated its net worth. AIG inflated reserve funds that were to be used for paying claims by millions of dollars and that AIG’s CEO Maurice Greenberg repeatedly directed AIG traders late in the day to buy AIG shares to prop up its price. However‚ aside from AIG’s corporate financial reporting errors or outright fraud
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THE INTERNAL CONTROLS AND FINANCIAL ACTIVITIES THAT LED TO THE BAILOUT OF OUR NATION’S LARGEST INSURANCE COMPANY By: Monte Schwartz PREFACE Anyone who watches TV has most likely seen the American International Group (hereinafter AIG) commercial with the little boy who walks into his parent’s room while they are sleeping. When his mother asks if he had a nightmare‚ he says “no” and that he’s worried about his parent’s financial future. After a twenty-second
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AIG’s CDS business: how AIG got involved in the crisis and why the biggest world insurance company suddenly collapsed. Part III is about credit default swaps: definition‚ construction‚ and problems. Part IV is concerned on the regulation reform after AIG’s failure. Wall Street Crisis Speaking of the Wall Street crisis‚ people all know it proceed from subprime crisis. The relatively low interest rate prompts banks to issue large amount of housing loans. To transfer default risk embedded in those loans
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Risks Faced by Banks and Regulatory Countermeasures Abstract The essay will analysis and discuss risk and regulation method for banks. There are different types of risks in bank operation; for instance‚ interest rate risk‚ credit risk‚ liquidity risk and operation risk. This essay will focus on the liquidity risk problem in bank and regulation countermeasure of liquidity risk. Regulators improved level of risk management after global financial crisis; therefore‚ the Basel Banking Supervision
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American International Group and the Bonus Fiasco On September 16‚ 2008 AIG suffered a liquidity crisis following the downgrade of its credit rating. In response‚ the federal government allotted AIG 85 billion in a bailout to keep the firm afloat in exchange for an equity stake in the company. In a very controversial move‚ AIG paid out more than 500 million in salaries and bonuses to senior employees after accepting the federal assistance money. This outraged the public‚ and in turn politicians
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Presented the Spring Meeting of the CAS New Orleans‚ Louisiana May 6‚ 2009 The Story of the AIG Accounting Scandal The Companies The Participants Regulatory Scrutiny Intensifies The Prosecution Case The Defense Case Relevant Laws and Regulations The Fate of the Participants The Companies AIG Overview (2007) World’s largest insurance and financial services company 93‚000 employees Business in 130 countries Led by Maurice (“Hank”) Greenburg Shareholder’s
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derivatives and loan contracts worth $32.7 billion withGoldman Sachs Group Inc.‚ Merrill Lynch & Co.‚ Societe Generale‚ Deutsche Bank AG and UBS AG. That’s about half the $66.7 billion that those companies‚ the five biggest beneficiaries of loans and capital infusions for AIG‚ said they spent on pay and benefits last year for employees‚ some of whom created or traded toxic subprime assets that proved deadly for lenders. The bonuses paid by AIG and the banks were allowed under a congressional exemption from
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| FINANCIAL ANALYSIS AND MANAGEMENT OF INTERNATIONAL GROUPS | Coursework | ACADEMIC YEAR 2010-2011 | | | | COMPANY PRESENTATION: AVNET Business Avnet‚ Inc.‚ incorporated in New York in 1955‚ together with its consolidated subsidiaries‚ is one of the world’s largest industrial distributors‚ based on sales‚ of electronic components‚ enterprise computer and storage products and embedded subsystems. Avnet creates a vital link in the technology supply chain that connects more
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Pre-September 2008: The AIG Crisis Over the years‚ AIG built upon its premier global franchises in life and general insurance by expanding into a range of financial services businesses. One of these‚ created in 1987‚ was AIG Financial Products Corp. (AIGFP)‚ a company that engaged as principal in a wide variety of financial transactions for a global client base. In 1998‚ AIGFP began to sell credit default swaps to other financial institutions to protect against the default of certain securities
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1. What‚ if any‚ were the relevant institutional voids in China? The relevant institutional voids for AIG in China were: 1. Macro level political and social context- media and non-governmental institutions had very little influence‚ but the government did‚ there was a political power monopoly. 2. Macro level openness of the economy – the Chinese economy lacked openness to foreign direct investment. 3. Product markets – there was weak property right protection‚ in the Chinese market there was
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