Comments on: AIG’s Bailout Needs a Bailout: A $150 Billion Problem http://johnappel.com/2008/12/12/aig%e2%80%99s-bailout-needs-a-bailout-a-150-billion-problem/ Companies with stock prices below their "fundamental" values Fri, 14 May 2010 14:27:03 +0000 hourly 1 http://wordpress.com/ By: The Fed’s House of Cards | NetRight Daily http://johnappel.com/2008/12/12/aig%e2%80%99s-bailout-needs-a-bailout-a-150-billion-problem/#comment-156 Fri, 14 May 2010 14:27:03 +0000 http://johnappel.wordpress.com/?p=505#comment-156 [...] How did we get here? Poor risk management. Prior to the bailouts, too-low capital requirements for financial institutions, banks and other entities resulted in a complete overleveraging on investments across the board. That means institutions only held a limited amount of capital to cover losses on purchases of everything from MBS to corporate bonds to government bonds. For example, as noted by Senator Jim DeMint, Fannie Mae and Freddie Mac were overleveraged by about 70-to-1 if not more. Bear Stearns was overleveraged by as much as 38-to-1, according to Huffington Post. AIG by 8-to-1 prior to its bailout, as noted by John Appel. [...]

]]> By: iifacts http://johnappel.com/2008/12/12/aig%e2%80%99s-bailout-needs-a-bailout-a-150-billion-problem/#comment-65 Tue, 10 Feb 2009 04:39:18 +0000 http://johnappel.wordpress.com/?p=505#comment-65 John,

Thanks for the nice work. What do you think about AIG’s common stocks? The situation is so fluid and my gut feeling is that $1 for an infinite long call option is not expensive.

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