AIG - BankLike-?
- Geithner / Warren -
- Warren - AIG was not a bank.
- Volcker - 1987-?
- FRB-1992-GICS-paper
- Pension plans that had placed funds in AIG guaranteed investment contracts, or GICs, which function much like deposits in a bank, would have experienced significant losses, losses that would be passed along to retirees or to others whose aspirations to be retirees would surely have been changed. (p2)
2010 0526 - COP - Hearing - Joint Written Testimony of Thomas C. Baxter and Sarah Dahlgren (Federal Reserve Bank of New York), Congressional Oversight Panel - 14p
- AIG - BankLike-?
- (p63) - Chair Elizabeth WARREN. Mr. Secretary, I come from a world of Chapter 11.
- People default all the time.
- They negotiate down on their obligations
- Secretary Tim GEITHNER. Right.
- Chair WARREN. And they do not bring down——
- Secretary GEITHNER. But——
- Chair WARREN [continuing]. The entire——
- Secretary GEITHNER. You’re exactly——
- Chair WARREN [continuing]. Financial system.
- Secretary GEITHNER [continuing]. Right. And you’re a national expert on this basic issue. But banks are different. AIG is effectively a bank.
- Chair WARREN. AIG was not a bank.
- Secretary GEITHNER. It——
- (p64) - Secretary GEITHNER. Can we do it a minute longer?
- It’s a very important debate to have.
- ....
- Chair WARREN. Go ahead, Mr. Secretary.
- Secretary GEITHNER. Financial institutions, which Congress has recognized for a long time, need a different type of bankruptcy regime than we have for other companies.
- Now, AIG is not a bank, but, in effect, it operated as a bank.
- It borrowed money, it operated on leverage, it did not have capital to support that.
- We’ve had in place a different type of bankruptcy for banks for many, many decades, however, we need one for complex finances that operate just like banks.
- Now, in bankruptcy, you have lots of choices.
- You can negotiate all sorts of different treatments, in this context, and in ways that would be helpful for the country.
- What we want is a bank-type resolution regime that gives us the choices that we’ve had for banks.
- But, we did not have that for complex, large financial institutions.
- And that’s what limited our choices.
- Now, AIG is not a bank, but, in effect, it operated as a bank.
- People default all the time.
2009 1210 - COP - Hearing - Hearing With Treasury Secretary Timothy Geithner, Congressional Oversight Panel --- [BonkNote]
- Conclusions
- Insurance companies are traditionally less vulnerable to financial crises than banks, in large part because they have relatively low-risk assets and do not rely heavily on short-term funding.
- However, AIG made itself vulnerable in a number of ways.
- Insurance companies are traditionally less vulnerable to financial crises than banks, in large part because they have relatively low-risk assets and do not rely heavily on short-term funding.
2015 - NBER - AIG In Hindsight, by Robert L. McDonald and Anna Paulson - 41p