A.I.G.and How to Burn Through $123 Billion in a Month

Questionable accounting practices may be to blame for American International Group burning through nearly all of its $123 billion in government loans received just last month, reports The New York Times.

The insurance giant was rescued from the brink of bankruptcy by the Federal Reserve in early Sept. with an $85 billion loan. Shortly thereafter, AIG needed to tap a $38 billion line of credit from the federal government. The company has not yet ruled out the possibility of asking for more.

That could be a tough sell. Recently, executives from AIG were grilled during Congressional hearings because of a luxurious “executive retreat“ taken by the company shortly after being bailed out with taxpayer dollars.

The company has already burned through $90 billion of its $123 billion in government loans and is refusing to disclose exactly where that money went prior to its quarterly report is released. Currently, at least $59 billion in spending is unaccounted for.

“You don’t just suddenly lose $120 billion overnight,” said Donn Vickrey of Gradient Analytics, an independent securities research firm in Scottsdale, Ariz.

Source The New York Times:

The American International Group is rapidly running through $123 billion in emergency lending provided by the Federal Reserve, raising questions about how a company claiming to be solvent in September could have developed such a big hole by October. Some analysts say at least part of the shortfall must have been there all along, hidden by irregular accounting.

Source: Economy in Crisis

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