AIG Bankruptcy Next Due To Falling Credit Rating & Mortgage Crisis
An AIG bankruptcy maybe next given their liquidity crisis caused by losses in their derivatives which require an influx of capital to cover. AIG’s credit rating was downgraded yesterday which combined with a widening credit crisis makes bankruptcy more likely.
AIG Bankrupt: Mortgage Crisis and Credit Rating to Blame
Another financial giant, American International Group or AIG, is on the verge of bankruptcy. This time the culprit is debt securities and derivatives. This AIG crisis can still be blamed on the mortgage meltdown since we know a few months ago AIG got sued over a $2 Billion writedown on mortgage related credit default swaps. This lead to the firing of the CEO Martin J. Sullivan.
So even though you have to dig a little, the subprime mortgage debacle can still be traced back as a precipitating cause.
AIG attempted to raise $70 billion to stay afloat yesterday, but ran into trouble due to a downgrade in their credit rating by Standard and Poor’s and Moody’s.
An AIG bankruptcy would send huge ripples through the worlds banking, investment, mortgage, and insurance markets.
Here’s a a Bloomberg video clip with more on AIG’s liquidity crisis, potential bankruptcy, and falling credit rating.
Author: The Mortgage Insider
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Tagged with: Bankruptcy • Credit Crisis • Credit Rating • Mortgage Crisis
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They should not get a nickel from the taxpayers or FRB until they reduce all consumer loans and mortgaes to 4%. Otherwise it is a big flim flam sham from the billion dollar man!!