Lots of intrigue over AIG
The New York Times reports that AIG is "rapidly running through" the $123 billion in emergency lending it has received from the Fed. It has drawn down $90 billion so far, which is prompting a lot of head scratching over accounting techniques. There seems to have been an internal conflict over how to value derivatives. An internal accountant hired by the company because of an earlier scandal has been sidelined on this issue and is now said to be in seclusion. But he has been in contact with government officials, who have his account of events. The company's external auditor, PricewaterhouseCoopers, warned of a material weakness before the government bailout. So the fear is that the company had racked up huge losses--that were undisclosed--before being bailed out. AIG has yet to provide information about how the funds have been used, but its first earnings report since the bailout may be released next week.
- here's the NY Times article