AIG sues two money managers over losses
A general view of insurance company AIG on March 26, 2009 in London, England. The company has received more than 170 billion USD from the US tax payer as part of a stimulus package. A substantial amount of this package was subsequently spent on executive's bonuses and despite calls from US authorities and President Obama for this money to be returned so far the company executives have refused.
STACEY VANEK SMITH: The New York Times reports this morning one-time insurance giant AIG is suing several Wall Street firms for allegedly misrepresenting the riskiness of those now infamous mortgage backed securities. AIG insured billions worth of those toxic assets and went belly up, when the bonds went bust
Eve Troeh has more.
EVE TROEH: AIG is going after ICP Asset Management and one of its clients. AIG insured mortgage-backed securities for ICP. The suit alleges that ICP knew some investments were bad. But didn't say anything so that its client could make more money.
Wall Street lawyer Bill Singer says AIG probably was a victim, but that doesn't mean it wasn't complicit.
BILL SINGER: It's very difficult not to roll your eyes and sort of smirk. Quite clearly AIG did not undertake anything near to adequate due diligence.
Singer says AIG's position is: we got duped, maybe willingly. And that doesn't exactly make investors swoon. After AIG's $180 billion bailout, the U.S. Treasury still holds most of the company's stock. It won't sell that stock until shares can fetch a price high enough to repay taxpayers. That's part of why AIG is suing.
SINGER: They still have an obligation on behalf of the U/S/ taxpayer to recover whatever funds they can.
AIG expects to recoup billions of dollars from this and many more lawsuits to follow.
I'm Eve Troeh for Marketplace.