The Great Debate UK
The federal government's $180 billion effort to prop up American International Group has worked, averting an even bigger financial catastrophe. Now it's time for the Obama administration to oversee the dismantling of the failed insurance giant with all due speed.
A report this week from the Government Accountability Office makes clear that AIG would crumble and likely reignite financial fears around the world without the government's massive support.
And the report says it's "unclear" whether AIG will ever pay back the $121 billion in government assistance that's still coursing through its balance sheet.
The GAO report should provide the administration will all the ammunition it needs to get tough with AIG. The report's conclusions should stiffen the spine of regulators in their dealings with Robert Benmosche, AIG's new $9 million chief executive.
A year after Lehman Brothers collapsed, policymakers are still getting to grips with the key question raised by the Wall Street firm's fall: how to ensure that the failure of a large bank does not jeopardise the entire financial system.
After much debate, politicians and central bankers are warming to the idea that banks should make preparations for their own failure. This plan -- memorably dubbed a "living will" by Mervyn King, governor of the Bank of England -- would allow regulators to wind down even large, cross-border institutions without putting public money at risk.
- David Andrews is director of David Andrews Media, a financial public relations consultancy with high profile fund management and financial services clients based in the UK, Ireland, Cayman Islands, Cape Verde, Beijing, Europe and the U.S. The opinions expressed are his own. -
David is a former financial journalist best known for his weekly Daily Express and Conde Nast ‘Money Matters’ columns.
Few will be lifting a glass to toast the first anniversary of the collapse of investment bank Lehman Brothers a year ago this week. With billions of dollars under management and thought to be invincible, the private bank was generally regarded as a potential gateway to the riches of Croessus for the ordained Masters of the Universe who prowled its Jackson Pollock-lined corridors.
It's taken awhile, but a deadline for filing claims in the Lehman Brothers bankruptcy has finally been set and it's Sept. 22.
A Sept. 15 deadline, the one-year anniversary of Lehman's collapse, would have been more appropriate. But maybe that would have just been rubbing everyone's face in it.
from The Great Debate:
Germany's politicians seem to have rescued their bad bank. Pushing back the valuation date for toxic assets to before the Lehman collapse has made it more likely that banks will consign their dud investments to the voluntary scheme.
It had looked as if the banks might simply boycott it. However, while the government has scored a political goal, it is no closer to its aim of boosting lending to a credit-starved German economy.
The essence of the scheme is that banks will be able to transfer some 250 billion euros of toxic assets into "eine Bad Bank". In exchange they receive government-backed paper that they can count towards regulatory capital.
Raymond Baer is splitting the family firm. He has noticed the conflict between the private bank and asset manager. Or, as he puts it, “both entities will benefit from their sharpened focus and the absence of competing interests, thus acting pro-actively in the best interest of all of our stakeholders”.