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.
We’re here to help you navigate this changed world and economy.
Our mission at Marketplace is to raise the economic intelligence of the country. It’s a tough task, but it’s never been more important.
In the past year, we’ve seen record unemployment, stimulus bills, and reddit users influencing the stock market. Marketplace helps you understand it all, will fact-based, approachable, and unbiased reporting.
Generous support from listeners and readers is what powers our nonprofit news—and your donation today will help provide this essential service. For just $5/month, you can sustain independent journalism that keeps you and thousands of others informed.