Saturday, September 5, 2009

“AIG Enters into Agreement to Sell Asset Management Business - StreetInsider.com” plus 4 more

“AIG Enters into Agreement to Sell Asset Management Business - StreetInsider.com” plus 4 more

AIG Enters into Agreement to Sell Asset Management Business - StreetInsider.com

Posted: 05 Sep 2009 07:56 AM PDT

More News related to AIG

More News related to AIG
September 5, 2009 11:00 AM EDT

NEW YORK--(BUSINESS WIRE)-- American International Group, Inc. (AIG) today announced an agreement to sell a portion of its investment advisory and asset management business to Bridge Partners, L.P., a company owned by Pacific Century Group (PCG), the Hong Kong-based private investment firm. AIG is retaining its in-house investment operation that oversees approximately $480 billion of assets under management.

The purchase price of approximately $500 million consists of a cash payment of approximately $300 million at closing, plus additional future consideration that includes a performance note and a continuing share of carried interest.

"After conducting an extensive and rigorous auction process, we concluded that this transaction provides fair value for AIG and achieves the greatest long-term stability and potential for the business, its clients, business partners and employees," said Alain Karaoglan, AIG Senior Vice President - Divestiture.

The units being sold operate in 32 countries and manage approximately $88.7 billion of investments of institutional and retail clients across a variety of strategies, including private equity, hedge fund of funds, listed equities and fixed income. Win J. Neuger will continue as Chief Executive Officer of the new business and the existing management team will remain in place.

Monika M. Machon will continue in her role as Senior Vice President and Chief Investment Officer of AIG, overseeing AIG's investment operation.

UBS Investment Bank acted as financial advisor to AIG and Perella Weinberg Partners acted as financial advisor to Pacific Century Group on this transaction. Debevoise & Plimpton LLP served as legal advisor to AIG.

The transaction is subject to receipt of regulatory approvals and other consents.

About Pacific Century Group:

Pacific Century Group (PCG) was established in 1993 and has interests in infrastructure, property, satellite communications and other investments in the Asia Pacific region, including Singapore, Hong Kong and Japan. PCG has a strong track record of holding and developing assets over the long term, and has a network of well-established connections in Asia. PCG previously owned Pacific Century Insurance, a leading Hong Kong life insurance company that included PCI Investment Management. With support from PCG, PCI Investment Management's assets under management increased seven-fold between 2000 and 2007, with a number of the company's funds receiving awards from Standard & Poor's and Lipper.

About American International Group, Inc.

American International Group, Inc. (AIG), a world leader in insurance and financial services, is the leading international insurance organization with operations in more than 130 countries and jurisdictions. AIG companies serve commercial, institutional and individual customers through the most extensive worldwide property-casualty and life insurance networks of any insurer. In addition, AIG companies are leading providers of retirement services, financial services and asset management around the world. AIG's common stock is listed on the New York Stock Exchange, as well as the stock exchanges in Ireland and Tokyo. 

 Source: American International Group, Inc.

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5 weeks on the brink: Reliving meltdown of '08 - Salon

Posted: 05 Sep 2009 09:00 AM PDT

Sep 5th, 2009 | NEW YORK -- The nation was focused on a tropical storm spinning off the Carolinas and a hurricane headed for Florida. People were gaming out how a political novice named Sarah Palin might upend the presidential campaign.

The Dow Jones industrial average closed at 11,220 on Sept. 5, the Friday after Labor Day last year. There was an economic slowdown under way -- no one doubted that. Whether it amounted to a bona fide recession was semantics, a question for economists.

But on Sunday morning, the federal government took an extraordinary step: It seized control of mortgage giants Fannie Mae and Freddie Mac, committing up to $200 billion of taxpayer money.

The companies, which combined either hold or guarantee half the mortgage debt in America, were posting billions of dollars in losses each quarter as an increasing number of homeowners stopped paying back their loans. Investors doubted the companies had the financial strength to survive the housing crash.

President George W. Bush, with less than five months to go in his presidency, said taking over Fannie and Freddie would be "critical to returning the economy to stronger sustained growth."

It turned out to be the beginning of something much more dire -- far beyond a correction, far beyond even a garden-variety recession, far beyond anything most people had lived through.

What it turned out to be was the beginning of five weeks that shook the American financial system to its foundations. The stock market convulsed. Wall Street itself was redrawn. The word "depression" was suddenly on everyone's lips.

One year later, the economy is only now beginning to show signs -- tentative at that -- of pulling out of the Great Recession, the longest economic contraction since World War II. The Dow, while still more than 30 percent off its peak, is no longer the source of a daily national ulcer.

But for five weeks in September and October last year, venerable Wall Street investment houses staggered, or disintegrated outright. The government concocted unprecedented rescue plans with 12-digit price tags almost impossible to comprehend.

It was a time when no place for money seemed safe.

In those first few days after the government stepped in to save Fannie and Freddie, Wall Street liked what it saw. Analysts figured interest rates on mortgages would drop substantially because of the security offered by the federal intervention.

The Dow floated back over 11,500. And after a long year of rising foreclosures, particularly on homes held by the less-than-ideal borrowers, there was hope of a turnaround.

"It saves Armageddon from happening," one insider, Dave Rovelli, managing director of U.S. equity trading at Canaccord Adams in New York, offered on the Monday after the Fannie and Freddie takeover.

But not 24 hours later, the landscape looked very different.

The next day, Sept. 9, Wall Street was consumed by worries about Lehman Brothers, the fourth-largest investment bank in the country, hammered by the deterioration of its heavy portfolio of mortgage-backed securities and other real estate-related assets.

Specifically, investors wondered whether Lehman had enough cash to survive. Talks with a state-owned Korean bank broke down. And the U.S. government was conspicuously silent.

By day's end, Lehman's stock price had fallen by almost half. The bank, which predated the Civil War and had survived the Great Depression, was left with a market value of $5.4 billion -- less than the online discount broker TD Ameritrade.

There were whispers that Lehman's lenders, who provided the money it needed to stay in business, were about to run for the hills.

For the rest of the week, investor confidence in Lehman steadily eroded. That weekend, officials from the Treasury Department, the Federal Reserve and major Wall Street banks met at the New York Fed's stately headquarters in downtown Manhattan.

Treasury Secretary Henry Paulson was adamantly opposed to having the government step in to save Lehman. No other bank stepped forward, either. Instead, Bank of America, pushed by the Fed and Treasury Department, bought Merrill Lynch, another storied but troubled Wall Street investment house.

Meanwhile, that Sunday night, the buzzards began circling at Lehman's Manhattan headquarters. Television crews lined the avenue across from the building, which featured giant, high-tech video screens. People held up cell phones and took pictures.

"Are you enjoying watching this?" one man said as he left the building. "You think this is funny?"

Not many people who paid attention to finance did. On Monday, Sept. 15, Lehman, founded in Alabama to serve cotton farmers, a firm that survived even the destruction of its headquarters in and around the World Trade Center, filed for bankruptcy.

Now three of the former Big Five investment houses -- Lehman, Merrill and Bear Stearns, which had been forced to sell itself to JPMorgan Chase earlier in the year -- were gone, at least in their former, mighty forms.

The financial crisis shifted into a terrifying higher gear.

The Dow lost more than 504 points that day, the most since the New York Stock Exchange reopened after the 9/11 terrorist attacks. About $700 billion in stock market wealth, much of it tied up in retirement plans, evaporated.

And now there were other problems: It had become painfully apparent that banks had hundreds of billions of dollars in bad debt on their books, most of it from risky bets made on securities tied to mortgages that were going sour.

Credit markets, which had been in turmoil for the better part of a year, began to tighten even further. And a new name surfaced on the financial death-watch list: American International Group, the largest insurer in the world.

Like Lehman Brothers, AIG had been hammered by the implosion of the subprime mortgage market and the credit crisis. The difference? It did business with almost every financial institution in the world, selling disastrously mispriced insurance policies on exotic investments.

AIG was so large, its tentacles so vast, that its collapse could have done almost inconceivable damage around the world. If Lehman's fall had dealt a body blow to the global economy, AIG had the potential for a knockout.

So the government stepped in again -- this time with an emergency $85 billion loan. In exchange, the government got a stake of nearly 80 percent in the company.

The American taxpayer now owned two mortgage giants and the world's biggest insurer.

Lehman Brothers and AIG had both assured investors in the months before that they would be fine. Now no one trusted anyone. Wall Street responded with another anxiety attack. On Wednesday, Sept. 17, the Dow fell 449 more points.

"People are scared to death," said Bill Stone, chief investment strategist for PNC Wealth Management.

And they were scared around the world. The crisis that infected the U.S. financial system posed grave danger around the world -- not just by hammering markets, but by plunging the world into a severe recession, perhaps worse.

With the panic in full motion and banks hoarding cash, central banks around the world decided to work together. On Sept. 18, they pledged to inject as much as $180 billion into money market funds to head off what they feared could be a wave of panicked withdrawals.

Back home, in Washington, the Fed pumped $105 billion into the U.S. banking system, and Bush canceled a trip to huddle with economic advisers. But everyone knew the solution would need to be much grander.

That afternoon, the Dow shot up 400 points, most of it in the final hours of trading, on a report that the government was putting together a plan to buy the bad debt off the books of banks.

The idea was that it would cleanse balance sheets of the difficult-to-value mortgage-related assets that were holding them back. No one knew exactly how much they were worth, so no one really knew exactly how sick the banks were.

At the Capitol on the night of Friday, Sept. 19 and in conference calls the following day, Paulson and Fed chief Ben Bernanke laid out a nightmare scenario: Say no to the plan and risk an utter collapse on Wall Street and maybe even a worldwide depression.

"When you listen to them describing this," said New York Sen. Charles Schumer, who was in the room, "you gulp."

A name caught on for the junk clogging bank balance sheets: toxic assets. And if that sounded strange, it was nothing compared with the price tag that surfaced over that weekend: $700 billion.

Twelve digits long, eight times as big as the AIG rescue, a number so big most Americans couldn't even comprehend it.

President Bush, seeking both to soothe a highly anxious nation and prod Congress into passing the breathtaking bailout, said: "This is a big package because it was a big problem."

More ominously, speaking of the tumultuous week in finance, he said: "So when one card started to go, we were worried about the whole deck going down, and so therefore moved, and moved hard."

Sens. John McCain and Barack Obama, in the middle of their fall presidential campaign, both supported the bailout package. House Republicans voiced strong objections. Besides being too expensive, they said, the program blurred public and private enterprise.

In a bit of theatrics in the White House Cabinet Room, Paulson knelt before House Speaker Nancy Pelosi, begging her to pass the bailout package even if it meant forgoing Republican support. According to other published accounts of the meeting, Bush, speaking of the economy, warned: "If money isn't loosened up, this sucker could go down."

In the nation's banking system, the aftershocks continued.

On Thursday, Sept. 25, Washington Mutual -- which earlier in the decade had run TV commercials mocking stodgy bankers in suits and hyping "the power of yes" in its eagerness to grant mortgages -- was seized by the Federal Deposit Insurance Corp., the largest American bank failure ever. What was left was gobbled up by JPMorgan Chase.

Four days later, Citigroup agreed to buy the banking operations of Wachovia, which, like WaMu, had done huge business in adjustable-rate mortgages, enticing borrowers who later defaulted on their home loans. (Wells Fargo later bested Citigroup's offer and bought all of Wachovia.)

That same day, Monday, Sept. 29, the bailout came up for a vote in the House. As the roll call began, the Dow was down about 210 points.

Representatives locked in their votes while C-SPAN showed the running tally. The "no" totals marched higher and higher. On Wall Street, traders' faces were tense. Their jaws literally dropped.

The bailout failed, 228-205. In a span of just five minutes, the Dow fell 400 more points. When the closing bell mercifully sounded, it was off nearly 778 points, easily its worst performance ever. More than $1 trillion in market value had evaporated, a first.

The Dow stood at 10,365. Congressional leaders scrambled to find a way to pass the bailout. Wall Street rallied the next day, Sept. 30, but remained nervous. "If it doesn't pass, then look out below," one trader said. "It could get ugly."

It finally did pass, and was swiftly signed into law on Oct. 3, after Republicans won provisions to raise the amount of personal bank deposits insured by the government and an easing of accounting rules for banks.

It got ugly anyway. From there, the stock market executed a slow-motion crash.

On Monday, Oct. 5, the Dow swooned below 10,000 for the first time since 2004, making an elevator-shaft drop of 800 points, its biggest ever during a single trading day, before recovering somewhat.

The next day, 508 points more. The day after that, 189 -- despite an emergency interest-rate cut by the Federal Reserve. The day after that, 678. And on Friday, Oct. 10, 128 more.

In a single week, the Dow had lost almost 20 percent of its value, a staggering 1,874-point plunge. The average stood at 8,451, its lowest level in more than five years. It was the worst week in the history of the stock market.

On the floor of the New York Stock Exchange, anxiety ran so high that one trader compared it to a football game -- when the Dow would peek into positive territory, lusty cheers would go up.

The following Monday, Oct. 13, Secretary Paulson summoned the CEOs of the nation's biggest banks to an extraordinary meeting at the Treasury. He told them that instead of buying their toxic assets, he had decided it was best to inject $125 billion into their institutions to signal to the world that the government would not let any of them fail. The strings attached included limits on executive pay and dividends, and after much grumbling all of the CEOs signed on before leaving.

The program was later extended to hundreds of other banks around the country, but the issue of toxic assets on bank balance sheets remains to this day.

The nation settled in for an economic winter whose length no one could predict. Traders were drowning their sorrows in bars near the exchange. And at a nearby coffee shop, Sandeep Bhanote was reflecting on the week with a Wall Street friend.

"I have a client who lived through the Depression and wars and everything," said Bhanote, a software engineer. "And he said, 'You know, we survived, and you will, too.'"

In hindsight, it sounds like common sense. But only in hindsight.



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Wrongly Convicted in Texas Paid $80G for Each Year Spent in Prison ... - FOX News

Posted: 05 Sep 2009 08:31 AM PDT

DALLAS — Thomas McGowan's journey from prison to prosperity is about to culminate in $1.8 million, and he knows just how to spend it: on a house with three bedrooms, stainless steel kitchen appliances and a washer and dryer.

"I'll let my girlfriend pick out the rest," said McGowan, who was exonerated last year based on DNA evidence after spending nearly 23 years in prison for rape and robbery.

He and other exonerees in Texas, which leads the nation in freeing the wrongly convicted, soon will become instant millionaires under a new state law that took effect this week.

Exonerees will get $80,000 for each year they spent behind bars. The compensation also includes lifetime annuity payments that for most of the wrongly convicted are worth between $40,000 and $50,000 a year — making it by far the nation's most generous package.

"I'm nervous and excited," said McGowan, 50. "It's something I never had, this amount of money. I didn't have any money — period."

His payday for his imprisonment — a time he described as "a nightmare," "hell" and "slavery" — should come by mid-November after the state's 45-day processing period.

Exonerees also receive an array of social services, including job training, tuition credits and access to medical and dental treatment. Though 27 other states have some form of compensation law for the wrongly convicted, none comes close to offering the social services and money Texas provides.

The annuity payments are especially popular among exonerees, who acknowledge their lack of experience in managing personal finances. A social worker who meets with the exonerees is setting them up with financial advisers and has led discussions alerting them to swindlers.

The annuities are "a way to guarantee these guys ... payments for life as long as they follow the law," said Kevin Glasheen, a Lubbock attorney representing a dozen exonerees.

Two who served about 26 years in prison for rape will receive lump sums of about $2 million apiece. Another, Steven Phillips, who spent about 24 years in prison for sexual assault and burglary, will get about $1.9 million.

The biggest compensation package will likely go to James Woodard, who spent more than 27 years in prison for a 1980 murder that DNA testing later showed he did not commit. He eventually could receive nearly $2.2 million but first needs a writ from the state's Court of Criminal Appeals or a pardon from the governor.

McGowan and the others are among 38 DNA exonerees in Texas, according to the Innocence Project, a New York legal center that specializes in overturning wrongful convictions. Dallas County alone has 21 cases in which a judge overturned guilty verdicts based on DNA evidence, though prosecutors plan to retry one of those.

Charles Chatman, who was wrongly convicted of rape, said the money will allow him some peace of mind after more than 26 years in prison.

"It will bring me some independence," he said. "Other people have had a lot of control over my life."

Chatman and other exonerees already have begun rebuilding their lives. Several plan to start businesses, saying they don't mind working but want to be their own bosses. Others, such as McGowan, don't intend to work and hope to make their money last a lifetime.

Some exonerees have gotten married and another is about to. Phillips is taking college courses. Chatman became a first-time father at 49.

"That's something I never thought I'd be able to do," he said. "No amount of money can replace the time we've lost."

The drumbeat of DNA exonerations caused lawmakers this year to increase the compensation for the wrongly convicted, which had been $50,000 for each year of prison. Glasheen, the attorney, advised his clients to drop their federal civil rights lawsuits and then led the lobbying efforts for the bill.

Besides the lump sum and the monthly annuity payments, the bill includes 120 hours of paid tuition at a public college. It also gives exonerees an additional $25,000 for each year they spent on parole or as registered sex offenders.

No other state has such a provision, according to the Innocence Project.

Exonerees who collected lump sum payments under the old compensation law are ineligible for the new lump sums but will receive the annuities. Whether the money will be subject to taxes remains unsettled, Glasheen said.

The monthly payments are expected to be a lifeline for exonerees such as Wiley Fountain, 53, who received nearly $390,000 in compensation — minus federal taxes — but squandered it by, as he said, "living large." He ended up homeless, spending his nights in a tattered sleeping bag behind a liquor store.

But after getting help from fellow exonerees and social workers, Fountain now lives in an apartment and soon will have a steady income.

Fountain's story is a cautionary tale for the other exonerees, who meet monthly and lately have been discussing the baggage that comes with the money.

Chatman said he's been approached by "family, friends and strangers, too."

"It takes two or three seconds before they ask me how much money, or when do I get the money," he said. "Everyone has the perfect business venture for you."

Though appropriately wary, the exonerees say they are excited about having money in the bank.

"You're locked up so long and then you get out with nothing," McGowan said. "With this, you might be able to live a normal life, knowing you don't have to worry about being out on the streets."



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ATBC,Atlantic Bancgroup Inc. Ends the trading day up 19.75% - Transworld News

Posted: 05 Sep 2009 08:24 AM PDT



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Drought Puts Focus on a Side of India Left Out of Progress - Star-Banner

Posted: 05 Sep 2009 08:17 AM PDT

Hundreds of miles away in this farming village in Andhra Pradesh, in the south, weeds were the only green shoots sprouting in the black soil that belongs to the widow Chandli Bai. Her field went 12 weeks without rain during India's annual monsoon season before showers finally arrived on Aug. 23, splattering down too late onto the dry dirt. Her summer crop of lentils was stillborn in the ground.

"We eat once a day," said Mrs. Bai, 65, explaining how she and her family had survived the lack of rain.

For the past year, as the economic crisis convulsed much of the world, India wobbled but never tumbled over. And now that the world is starting to pull itself out of the mire, India seems poised to resume its rapid economic expansion. Government officials are projecting that growth will reach or surpass 6 percent this year and approach 8 percent next year, almost the pace that established India as an emerging global economic power second only to China.

But the cautious optimism about the broader economy has been tempered by a historic summertime drought that has underscored the stubborn fact that many people are largely untouched by the country's progress. India's new economy may be based on software, services and high technology, but hundreds of millions of Indians still look to the sky for their livelihoods; more than half the country's 1.1 billion people depend on agriculture for a living even though agriculture represents only about 17 percent of the total economy.

No one thinks India is facing the type of famines that struck it decades ago; government grain stocks can replenish any shortfalls. But the drought has focused attention, again, on the problems facing Indian agriculture as the population continues to expand at the same time that water resources come under greater pressure.

During the 1960s, India introduced a "green revolution" that sharply improved grain output. Now, many analysts are calling for a second green revolution to address the complicated problems presented by global warming, rapidly diminishing groundwater supplies and stagnant incomes for farmers.

"A lot of us have gotten carried away and forgotten these problems exist," said Bharat Ramaswami, an economist at the Indian Statistical Institute. "We need to think a little more about how this economic growth could better filter down to the poor."

Last spring, Prime Minister Manmohan Singh and his Congress Party won a resounding victory in national elections by promising to address this inequality, but the government has yet to announce major programs.

One problem now, as opposed to in the 1960s, is that there are no obvious technological breakthroughs to radically change the status quo. During the green revolution, India introduced high-yield seeds and fertilizers and expanded irrigation.

Today, the challenge is more nuanced, involving a nationwide coordination effort to improve irrigation, better capture rainwater and conserve groundwater while lifting production — the type of complicated management task that critics say is rarely the strong suit of the Indian bureaucracy.

Every summer, India awaits the monsoon. Some years bring too much rain and catastrophic flooding; others bring too little rain. This summer, rainfall is down 25 percent, and roughly half of the rural districts were declared drought zones. As production has fallen, prices have risen for staples like rice.

To the eye, the drought can be deceptive. In Pipri Village, as in other areas, greenery is evident, even as nearly every field without irrigation is stunted.

In recent days, rains have returned to Pipri and some other areas, but not in time to save the summer, or kharif, crop. Located three hours from the high-tech center of Hyderabad, Pipri is one of thousands of Indian villages decimated by the drought.

On a recent afternoon, Mrs. Bai, the widow, stood at the edge of her ragged seven acres, her toes caked in dirt as she motioned to the remains of the pyre used to cremate her husband four months ago. The family had borrowed 80,000 rupees, or about $1,640, to treat his kidney disease; the failed crop left them without money to pay off the debt. Only one of her seven children reached 10th grade, and none can find work off the land.

"I may die before I can repay that loan," she said.

This cycle of debt is a persistent problem, often blamed for periodic spates of farmer suicides, while the high illiteracy rate in the countryside makes it hard for farmers to switch to jobs in India's services sector.

Before the national elections, the Congress Party announced a plan to forgive certain farm loans. Many farmers can also take part in a government employment program that guarantees 100 days of manual labor for roughly $2 a day.

But the drought has brought renewed pressure. An hour from Pipri Village, farmers recently clamored around a dilapidated branch of the government's Syndicate Bank. One man came because of the false rumor that farmers were receiving a 1,500-rupee stipend (about $30). Others came looking for loans. "We need the loans to plant the other crops," one farmer said. "They keep saying to come back next week."

Before the drought, rural India was helping to buttress the national economy during the global downturn as rural consumption helped drive consumer spending. But parts of that demand were driven by backdated pay increases for millions of government workers. Now the government is subsidizing seeds and diesel fuel to help farmers through the drought, even as some economists worry that subsidies will worsen the federal deficit.

Too often, many analysts say, the government's response involves such short-term fixes rather than efforts to tackle the structural problems in the rural economy. A study by the International Food Policy Research Institute noted that India spent $25 billion in 2008 on fertilizer subsidies, but only $5 billion on agricultural investment — even though investment yields 10 times more returns.

India, analysts say, must learn to produce more food with less water, even while lifting rural education levels so that farmers can shift to the higher paying jobs at the heart of India's economic rise.

"We can manage the drought," said T. Nanda Kumar, secretary of the Ministry of Agriculture. "We have managed earlier droughts. But we need to move some people out of agriculture. I don't think that a 17 percent share of G.D.P. and a 50 percent share of employment are viable in the long run."



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