The Resource Federal financial assistance : preliminary observations on assistance provided to AIG : testimony before the Subcommittee on Capital Markets, Insurance, and Government Sponsored Enterprises, House Committee on Financial Services, statement of Orice M. Williams

Federal financial assistance : preliminary observations on assistance provided to AIG : testimony before the Subcommittee on Capital Markets, Insurance, and Government Sponsored Enterprises, House Committee on Financial Services, statement of Orice M. Williams

Label
Federal financial assistance : preliminary observations on assistance provided to AIG : testimony before the Subcommittee on Capital Markets, Insurance, and Government Sponsored Enterprises, House Committee on Financial Services
Title
Federal financial assistance
Title remainder
preliminary observations on assistance provided to AIG : testimony before the Subcommittee on Capital Markets, Insurance, and Government Sponsored Enterprises, House Committee on Financial Services
Statement of responsibility
statement of Orice M. Williams
Title variation
  • Federal financial assistance
  • Preliminary observations on assistance provided to AIG
Title variation remainder
preliminary observations on assistance provided to American International Group
Creator
Contributor
Subject
Language
eng
Summary
The Board of Governors of the Federal Reserve System (Federal Reserve) and the Department of the Treasury (Treasury) have made available over $182 billion in assistance to American International Group (AIG) to prevent its failure. However, questions have been raised about the goals of the assistance and how it is being monitored. Also, because AIG is generally known for its insurance operations, questions exist about the effect of the assistance on certain insurance markets. This statement provides preliminary findings on (1) the goals and monitoring of federal assistance to AIG and challenges to AIG's repayment of the assistance; and (2) the potential effects of the federal assistance on the U.S. commercial property/casualty insurance market. GAO's work on these issues is ongoing. To date, we have reviewed relevant documents on the assistance and ongoing operations of AIG, as well as documents issued by the Federal Reserve and Treasury. We also interviewed officials from these organizations as well as industry participants (competitors, brokers, and customers) and insurance regulators, among others. Federal financial assistance to AIG, both from the Federal Reserve and Federal Reserve Bank of New York through their authority to lend funds to critical nonbank institutions and from Treasury's Troubled Asset Relief Program (TARP), has focused on preventing systemic risk that could result from a rating downgrade or failure of AIG. The goal of the assistance and subsequent restructurings was to prevent systemic risk from the failure of AIG by allowing AIG to sell assets and restructure its operations in an orderly manner. The Federal Reserve has been monitoring AIG's operations since September, and Treasury has begun to more actively monitor AIG's operations as well. Although the ongoing federal assistance has prevented further downgrades in AIG's credit rating, AIG has had mixed success in fulfilling its other restructuring plans, such as terminating its securities lending program, selling assets, and unwinding its AIG Financial Products portfolio. For example, AIG has made efforts at selling certain business units and has begun an overall restructuring, but market and other conditions have prevented significant asset sales, and most restructuring efforts are still under way. AIG faces ongoing challenges from the continued overall economic deterioration and tight credit markets. AIG's ability to repay its obligations to the federal government has also been impaired by its deteriorating operations, inability to sell its assets and further declines in its assets. All of these issues will continue to adversely impact AIG's ability to repay its government assistance. As part of GAO's ongoing work related to the federal assistance provided to AIG, GAO is reviewing the potential impact of the assistance on the commercial property/casualty insurance market. Specifically, GAO is reviewing potential effects of the assistance on AIG's pricing practices. According to some of AIG's competitors, federal assistance to AIG has allowed AIG's commercial property/casualty insurance companies to offer coverage at prices that are inadequate for the risk involved. Conversely, state insurance regulators, insurance brokers, and insurance buyers said that while AIG may be pricing somewhat more aggressively than in the past in order to retain business in light of damage to the parent company's reputation, they did not see indications that this pricing was inadequate or out of line with previous AIG pricing practices. Moreover, some have noted that AIG has lost business because of the problems encountered by its parent company. As GAO evaluates these issues, it faces a number of challenges associated with determining the adequacy of commercial property/casualty premium rates, especially in the short term. These challenges include the unique, negotiated nature of many commercial insurance policies, the subjective assumptions involved in determining premiums, and the fact that for some lines of commercial insurance it can take several years to determine if premiums charged were adequate for the related losses
Member of
Cataloging source
ESR
http://library.link/vocab/creatorName
Williams, Orice M
Government publication
federal national government publication
Index
no index present
Literary form
non fiction
Nature of contents
  • dictionaries
  • bibliography
http://library.link/vocab/relatedWorkOrContributorName
  • United States
  • United States
Series statement
Testimony
Series volume
GAO-09-490T
http://library.link/vocab/subjectName
  • American International Group, Inc
  • Insurance
  • Economic stabilization
Label
Federal financial assistance : preliminary observations on assistance provided to AIG : testimony before the Subcommittee on Capital Markets, Insurance, and Government Sponsored Enterprises, House Committee on Financial Services, statement of Orice M. Williams
Link
http://purl.access.gpo.gov/GPO/LPS113142
Instantiates
Publication
Note
  • Title from PDF title screen (viewed May 12, 2009)
  • "For release ... March 18, 2009."
Bibliography note
Includes bibliographical references
Carrier category
online resource
Carrier category code
cr
Carrier MARC source
rdacarrier
Color
mixed
Content category
text
Content type code
txt
Content type MARC source
rdacontent
Control code
17612278
Dimensions
unknown
Extent
19 pages
Form of item
electronic
Media category
computer
Media MARC source
rdamedia
Media type code
c
Other physical details
digital, PDF file.
Specific material designation
remote
System details
  • System requirements: Adobe Acrobat Reader
  • Mode of access: Internet from GAO web site. Address as of 5/12/2009: http://www.gao.gov/new.items/d09490t.pdf ; current access available via PURL
Label
Federal financial assistance : preliminary observations on assistance provided to AIG : testimony before the Subcommittee on Capital Markets, Insurance, and Government Sponsored Enterprises, House Committee on Financial Services, statement of Orice M. Williams
Link
http://purl.access.gpo.gov/GPO/LPS113142
Publication
Note
  • Title from PDF title screen (viewed May 12, 2009)
  • "For release ... March 18, 2009."
Bibliography note
Includes bibliographical references
Carrier category
online resource
Carrier category code
cr
Carrier MARC source
rdacarrier
Color
mixed
Content category
text
Content type code
txt
Content type MARC source
rdacontent
Control code
17612278
Dimensions
unknown
Extent
19 pages
Form of item
electronic
Media category
computer
Media MARC source
rdamedia
Media type code
c
Other physical details
digital, PDF file.
Specific material designation
remote
System details
  • System requirements: Adobe Acrobat Reader
  • Mode of access: Internet from GAO web site. Address as of 5/12/2009: http://www.gao.gov/new.items/d09490t.pdf ; current access available via PURL

Library Locations

    • Indiana State LibraryBorrow it
      315 W. Ohio St., Indianapolis, IN, 46202, US
      39.77004 -86.164015

Library Links

Processing Feedback ...