AIG Reporting: Comprehensive Analysis of Financial Risks and Bailout

This report provides an analysis of AIG's financial reporting practices, highlighting the risks associated with its investment strategies, particularly its involvement with credit default swaps and mortgage-backed securities. It examines the detection of fraud, the government's intervention through a bailout, and the lessons learned from the crisis. The report also addresses the controversy surrounding the bailout, specifically the allocation of taxpayer funds to large banks. Recommendations are made regarding transparency and accountability in future financial interventions. The report concludes by emphasizing the importance of logical rationales for financial redemptions and the need for congressional oversight in similar situations.

AIG Reporting

Introduction
unsophisticated and passive player in the
market
The financial products that were provided
by the organization were treated as
synthetic buyers of a variety of assets were
backed with securities including the
mortgages and infrastructure linked with
bonds in the Wall Street.

The strategy of the organization to invest in
the synthetic investments in bonds was
very risky for the business. Therefore, when
the value of bonds declined the
Organisation was having the contractual
obligation to make the related parties
aware of it. Of all the points insured by the
company, there were many which were
relatively illiquid because

Background
The farm was worker trying to sell credit
default swaps that can perform for the
organization in the much ordinary manner
just like the bond investors
The farm was worker trying to sell credit
default swaps that can perform for the
organization in the much ordinary manner
just like the bond investors (Boyd & Roddy,
2011)

Detection of fraud
contingency plan
Helps in reduction of risk

Investigation and aftermath
insured CDO’s was kept in the form of
bundled mortgage an
whatever was insured by it would never have
to be covered and even if there's a risk for
covering insurance, it would be in an
insignificant amount that would be very
small in front of the capital (Davidson,
2008).
when it was observed that the risk levels are
incredibly high, the Organisation was to pay
out on what it promised to cover.

Lessons learned, 2009)
But, in the case of AIG, there was no investor
who was having the capacity aura
resources to take over the organization.
Hence, the government stepped in. The
major power exercise by the government is
not the best resources for the ability to
print money but it is the power of the fact
that it can hold assets as long as necessary.
in the case of AIG, there was no investor who
was having the capacity aura resources to
take over the organization

Lesson learnt
the major power exercise by the government
is not the best resources for the ability to
print money but it is the power of the fact
that it can hold .
Transparency is vital: one of the most
controversial events in the bailout of the
organization was the taxpayer’s fund of
more than $62 billion that went to the big
banks which were involved in contacts with
the organization (Angelides 2011).

Recommendations
The bailout of the firm was not carried out
without any kind of controversy
the rationale for these Redemptions would have
been logical and have helped to improve the
integrity of the financial systems and also the
sanctity of the legal contracts of the
organization
Any such further bailouts will force the
congressional hearings to be carried out and the
politicians will be liable to convince the voters
and explain them everything in this regard.

THANK you

References
Angelides, P. (2011). Financial Crisis Inquiry Report.
DIANE Publishing.
Boyd & Roddy (2011). Fatal Risk: A Cautionary Tale of
AIG's Corporate Suicide. Hoboken, NJ: Wiley. ISBN
978-0-470-88980-0.
Bauer, R & Hann, D. (2010). Corporate environmental
management and credit risk. Maastricht University.
Davidson, A. (2008). How AIG fell apart. Retrieved from:
https://www.reuters.com/article/us-how-aig-fell-apart-id
USMAR85972720080918
Davies, P.J. (2010). Learning the lessons of AIG fall.
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