Tuesday, March 29, 2005

What a fall from grace


aig
Originally uploaded by punditreview.

Things are unravelling fast in the insurance industry. Layer upon layer of shady deals and secret enteties are being uncovered. One Wall Street legend has been crushed, and another is in the crosshairs. Hank Greenberg is out at AIG and Warren Buffet has a date with Elliot Spitzer. This is a fascinating story to follow. It makes me realize how much the deck is stacked against the average Joe.

Hank Greenberg Ends 37-Year Career at Helm of AIG, Faces Deposition With New York Regulators

NEW YORK (AP) -- The man who built American International Group Inc. into one of the world's largest insurers, Maurice "Hank" Greenberg, is retiring as chairman, two weeks after board members ousted him as chief executive because of intensifying regulatory probes into the company's past financial transactions.

Buffett Is Called For Questioning In AIG Inquiry; New Evidence of Problems

Regulators expect to question the 74-year-old Mr. Buffett about documents and
witnesses that they believe indicate he was involved early on in discussions
about the transaction between (Buffett's) General Re and (Greenberg's) AIG, including its structure, this person said.

Mr. Greenberg is scheduled to give a deposition the next day.

The transaction between AIG and General Re, which took place in 2000, has
emerged as a focus of a broad regulatory review of "nontraditional" insurance
products that regulators believe may have been used by companies to improperly
boost their financial positions. The transaction involves reinsurance, a type of
insurance for insurance companies.


Old friend Don Luskin has never been fond of Elliot Spitzer and his never ending investigations, as he made clear on Pundit Review Radio. However, he isn't exactly shedding a tear for Warren Buffett,

I hate to see any business fall victim to government's regulatory vultures.
But as long as having the liver of capitalism clawed out is the order of the
day, I'm delighted to see the self-righteous Warren Buffett get bloodied by the
talons.

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