It’s been a while since we talked about AIG, but there’s plenty to talk about today. First, CEO Edward Liddy testified before Congress this morning about the company’s plan for paying back the taxpayers. The “secret” plan is known as Project Destiny. They may have to rename it Project Futility.
Liddy didn’t give Congress many details. He said saying too much would provide sensitive information to the competition.
What he did say was: AIG plans to close its (god-awful) financial products division at some point. AIG’s restructuring also involves the government taking a stake (again?) in AIG’s foreign life insurance units and AIG sellling IPO stakes in a couple of other businesses, namely its property and casualty firm, AIU.
Some analysts aren’t very impressed. From CNNMoney:
“The magnitude of the amount of payback to the government is beyond the earnings capability of the company,” said Andrew Barile, insurance consultant and chief executive of Andrew Barile Consulting Corp. “It’s a mess, and I think AIG is totally confused about what to do.”
“The only solution is to break AIU down even further and make smaller plays, which isn’t really their style,” he argued. “But if they can do 25 IPOs instead of three, they can possibly pay back the government.”
But even if that happens, it’s going to be a while — like 3-5 years, under optimum conditions.
Liddy says he’s also worried about AIG’s exposure to commercial real estate. Great.
So far, AIG has drawn down $130 billion in bailout money. And it has paid back just $3 billion.
One more item on AIG. The Washington Post reports that the Federal Reserve of New York knew about AIG’s infamous bonus payments months before the story blew up in March (after the payments went out). The Post says the New York Fed knew in September. The head of the New York Fed at that point?
Your Treasury Secretary, Tim Geithner.
You can watch Liddy’s testimony to House Oversight Committee here:
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