Tuesday, November 11, 2008

The AIG and Berkshire Hathaway scandal

We now have a government willing to "bailout" every overpaid blundering idiot who over-leveraged their company.  The federal government delved deeper and more intricately into the bondholder bailout business by announcing plans to goose its investment in American International Group (AIG) once again, this time to $150 billion.  Nine of the eleven AIG board members retained their seats after the Governments first intervention.  A former AIG CEO Maurice R. Greenberg of the scandal ridden company was forced out March 28, 2005, after four decades amid an accounting scandal.

The Securities and Exchange Commission and the New York attorney general's office poured over dozens of transactions with scores of reinsurance companies to determine how many transactions A.I.G. might have used to bolster its bottom line.  AIG acknowledged March 30, 2005 that its accounting for a number of transactions, including a deal with a unit of Warren E. Buffett's company, was improper.  Investigators focused on a 2000 transaction between A.I.G. and General Re, a unit of Mr. Buffett's company.  Investigators found that Berkshire Hathaway, artificially inflated A.I.G.'s reserves by $500 million.  Investigators interviewed the Berkshire Hathaway executive Mr. Buffett on April 11, 2005.  Investigators commented that it felt to them that they were only seeing the tip of an iceberg.
Billionaire investor Warren Buffett, who owns Berkshire Hathaway, is expected to keep an eye on AIG’s subsidiaries in case they come up for sale to pay off AIG’s debt.    

update --- Berkshire Hathaway owns 13.1% of American Express stock.  The same company that is now looking for a government bailout.


Shea said...

wow, thanks for your comment and information, I didn't know that, but it's not surprising in how corrupt things have become,
I hope that things will get better, but right now it's only hope

Shea said...

I added you to the new blog roll on Hidden world