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ryan1234
09-17-2008, 05:53 AM
Government steps in again, bails out AIG with $85B - Yahoo! News (http://news.yahoo.com/s/ap/20080917/ap_on_bi_ge/aig)


WASHINGTON - Another day, but not just another bailout. This one's a stunning government takeover.

In the most far-reaching intervention into the private sector ever for the Federal Reserve, the government stepped in Tuesday to rescue American International Group Inc. with an $85 billion injection of taxpayer money. Under the deal, the government will get a 79.9 percent stake in one of the world's largest insurers and the right to remove senior management.
AIG's chief executive, Robert Willumstad, is expected to be replaced by Edward Liddy, the former head of insurer Allstate Corp., according to The Wall Street Journal, citing a person it did not name. Willumstad had been at the helm of AIG since June.
A call to AIG to confirm the executive change was not immediately returned.
It was the second time this month the feds put taxpayer money on the hook to rescue a private financial company, saying its failure would further disrupt markets and threaten the already fragile economy.
AIG said it will repay the money in full with proceeds from the sales of some of its assets. It will be up to the company to decide which assets to sell and the timing. The government does, however, have veto power.
Under the deal, the Federal Reserve will provide a two-year $85 billion emergency loan at an interest rate of about 11.5 percent to AIG, which teetered on the edge of failure because of stresses caused by the collapse of the subprime mortgage market and the credit crunch that ensued. In return, the government will get a 79.9 percent stake in AIG and the right to remove senior management.
AIG shares sank $1.34, or 36 percent, to $2.41 in morning trading Wednesday. They traded as high as $70.13 in the past year.
The government's move was similar to its bailout of Sept. 7 of mortgage giants Fannie Mae and Freddie Mac, where the Treasury Department said it was prepared to put up as much as $100 billion over time in each of the companies if needed to keep them from going broke.
The Fed said it determined that a disorderly failure of AIG could hurt the already delicate financial markets and the economy.
It also could "lead to substantially higher borrowing costs, reduced household wealth and materially weaker economic performance," the Fed said in a statement.
The decision to help AIG marked a reversal for the government from the weekend, when it refused to use taxpayer money to bail out Lehman Brothers Holdings Inc. Lehman, which filed for bankruptcy protection Monday, collapsed under the weight of mounting losses related to its real estate holdings.
The White House said it backed the Fed's decision Tuesday.
"These steps are taken in the interest of promoting stability in financial markets and limiting damage to the broader economy, " White House spokesman Tony Fratto said.
After meeting with Treasury Secretary Henry Paulson and Fed Chairman Ben Bernanke in a late-night briefing on Capitol Hill, Congressional leaders said they understood the need for the bailout.
"The administration is approaching an unprecedented step, but unfortunately we are living in unprecedented times. Hearing of these plans, you have to stop to catch your breath. But upon reflection, the alternatives are much worse," said Sen. Charles Schumer, D-N.Y.
In a statement late Tuesday, AIG's board of directors said the loan will protect all AIG policy holders, address concerns of rating agencies and buy the company time to sell off assets.

"We expect that the proceeds of these sales will be sufficient to repay the loan in full and enable AIG's businesses to continue as substantial participants in their respective markets," the statement said. "In return for providing this essential support, American taxpayers will receive a substantial majority ownership interest in AIG."
New York officials said the deal helps stave off a fiscal crisis for the state. AIG is based in New York.
"Policy holders will be protected, jobs will be saved," New York Gov. David Paterson said Tuesday night.
In an interview on ABC's "Good Morning America" program Wednesday, former longtime AIG CEO Maurice "Hank" Greenberg was asked whether critics are being fair who say the situation at AIG and the financial markets generally happened because of greed, bad business practices and corruption.
"No, I think it's an unfair appraisal," said Greenberg, who was replaced as CEO three years ago as part of an accounting probe. "You know, there are many things that contributed to this unfortunate episode. after I left the company, all the risk management procedures that we had in place were obviously dismantled. I can't explain that. There's a new board of directors. One should be asking that board of directors what they did and why."
Greenberg said he has lost "my entire net worth. Literally, my entire net worth.'
"Worked 40 years building the greatest insurance company in history, one that everyone in the world envied who was in this industry. I'll get by, but my heart goes out for the thousands and thousands of employees and their families who shareholders and not only in the united states but worldwide. That is a tragedy," he said.
The Fed's move was part of a concerted push to help calm jittery markets and investors around the world.
On Tuesday, the Fed decided to keep its key interest rate steady at 2 percent, but acknowledged stresses in financial markets have grown and hinted it stood ready to lower rates if needed.
The central bank also pumped $70 billion into the nation's financial system to help ease credit stresses. In emergency sessions over the weekend, the Fed expanded its loan programs to Wall Street firms, part of an ongoing effort to get credit flowing more freely.
The stock market, which Monday posted its largest point loss session since the Sept. 11 attacks, recovered Tuesday after the Fed's decision on interest rates. The Dow Jones industrials rose 141 points after losing 500 points on Monday.
AIG's shares swung violently, though, as rumors of potential deals involving the government or private parties emerged and were dashed. By late Tuesday, its shares had closed down 20 percent — and another 45 percent after hours.
The problems at AIG stemmed from its insurance of mortgage-backed securities and other risky debt against default. If AIG couldn't make good on its promise to pay back soured debt, investors feared the consequences would pose a greater threat to the U.S. financial system than this week's collapse of the investment bank Lehman Brothers. The worries were heightened Monday after Moody's Investor Service, Standard and Poor's and Fitch Ratings lowered AIG's credit ratings, forcing AIG to seek more money for collateral against its insurance contracts. Without that money, AIG would have defaulted on its obligations and the buyers of its insurance — such as banks and other financial companies — would have found themselves without protection against losses on the debt they hold.


capncrunch
09-19-2008, 11:24 AM
I just bought 700 shares. Lets hope they can get back to their $60-70 range and then I will have made mint.

ryan1234
09-19-2008, 06:18 PM
I just bought 700 shares. Lets hope they can get back to their $60-70 range and then I will have made mint.


Good luck to you....

I'm holding out till this short selling ban is up to put anymore into financials...hopefully there will be some good deals in a few weeks....We'll see what happens... hard to say exactly.... thinking about waiting til BAC drops to $25 +/- (hope it actually happens)


atpwannabe
09-20-2008, 01:49 AM
Frankly, I'd rather see some bailouts and more gov't control than to have the financial markets and the economy as a whole implode on its self.

However, according to the head of the IMF, this is just the beginning for all of the world's financial markets. We may be heading toward that one world currency or cashless society after all.:(:mad:


atp

ryan1234
09-20-2008, 08:11 AM
Frankly, I'd rather see some bailouts and more gov't control than to have the financial markets and the economy as a whole implode on its self.

However, according to the head of the IMF, this is just the beginning for all of the world's financial markets. We may be heading toward that one world currency or cashless society after all.:(:mad:


atp

Just another step towards socialized capitalism....

Total bailouts so far equates to about $2000 per person in America

Bailouts are bad long term idea, look at history.

ToiletDuck
09-21-2008, 07:33 AM
Bailouts are HORRIBLE. They kill free market. I basically just had $5k stolen from me by the government because I owned a few short contracts. Not a good feeling. Explain to me how it's legal? I purchase a contract that is out there then the govt steps in and says "Hey we'll allow you to dump all your bad assets onto an imaginary bank then we'll purchase up to 700 billion worth then we'll ban short selling so the market CANT go down"! This neglects the actual value of a stock. This is nothing more that market manipulation which is costing people billions. They aren't losing billions because they made a bad choice. They're losing it because the gov't basically just walked in and took it.

It's like going to a roulette wheel and placing a bet on black and red and then the casino says "Sorry folks no more red" and just takes your chips. My options expired in OCT 19th so now that they've banned them till the 3rd they'll have lost half their value regardless simply because of the time left.

They're talking about market manipulation as if the shorts, who only held about 4.2%, were the ones doing it. Shorts are required to keep the market honest. This isn't the great depression where they ran upwards of 20+%. 4% is not out of the norm. The reason the financials suck is because they ran themselves into the ground. They're worried about people not having confidence in our market yet somehow believe walking in and regulating it is going to do the job.

How many people in the government own stock and were directly affected by it's actions? How many people own shares in the companies that just jumped about 800 points? Insider trading that's slapping the country across the face.

The only way our market can be successful is if it's allowed to fail. Fannie and Freddie were part gov't and takeover was ok. AIG should be forced into BK along with anyone else. BAC, Citigroup, Barclays, HSBC, etc can easily pick up the tabs on their debts and emerge as very successful companies.

Read my signature for the rest and explain to me how it's legal. I'm not paying for someone elses mistakes when they don't give a damn about any I make on my own. Now the Dems want to include where the 700bil bailout will help keep people in their homes. What BS!!! If they can't afford it then they shouldn't have bought it. I'm not here to help people who bought homes as investment properties or all the sudden realize they can't afford their bills. You make your bed you sleep in it. Now I'm picking up the tab because I tightened my belt and made good decisions.

This is just the beginning. Mark my words. There are billions being left on the table by this ban. The value of my shorts went from $3.15 per share to $1.05 per share currently. There will be lawsuits out the wazoo on this. When it comes to markets the worst thing the govt can do is intervene.

They are idiots. The US currently pays about $400 billion a year in interest ALONE, roughly $1300 per person and thats IF they all paid taxes, on the debt it already has and now it wants to up that another $700 billion and that's before the $100+ billion stimulus pkg the Dems want to push though (shortly after downing Bush for making the first one which is pure irony) and other things they are wanting to do.

They're establishing a double sided financial system where only the small are held accountable and there couldn't be a more wrong way to go. I know I didn't get a PHD in economics but considering the fact all we do is go arse backwards in debt makes me question those that did.

Another note. When the ban is lifted on short selling expect the market to fall like no other as the financial institutions will have been propped up by govn't movements that have nothing to do with their real value.

ToiletDuck
09-21-2008, 07:43 AM
Good luck to you....

I'm holding out till this short selling ban is up to put anymore into financials...hopefully there will be some good deals in a few weeks....We'll see what happens... hard to say exactly.... thinking about waiting til BAC drops to $25 +/- (hope it actually happens)

I don't know if you'll see $25 but it will get close. With the stock swap that's going on BAC will be releasing millions of more shares out to the open market. They won't be able to support paying the dividend on so many shares that they'll probably cut it by about 30%. The price will dive pretty hard. I purchased 20 OCT $30 put contracts at $2.57 so if it even approaches $30 I'll be back in the black on that investment.

Like you I'm out too. I cashed in my winnings and sitting this one out till the drop comes. My few options will stay put. I expect them to cut the div during their oct meeting which will probably put them back in play. If not then I'll just swallow the 5k and move on. When it drops I'll be going long on it myself as well. With the acquisition of MER the company is easily worth $50 once they emerge from all this. I'm sure we'll see a market drop or two if WM can't be sold.

ToiletDuck
09-21-2008, 07:48 AM
Frankly, I'd rather see some bailouts and more gov't control than to have the financial markets and the economy as a whole implode on its self.

It's just a false feeling that this helps the market. By stepping in the gov't is basically creating a "false inflation" on the value of all these financials. What happens when the bailout money dries up? What happens when the short ban is lifted? That inflation will be called into play and those stocks will dive back down to where they are and should be. Debt just doesn't disappear. They can move it all they want but it still exists. So when it dives back down now were up to 11.3 trillion in debt and even worse off.

ToiletDuck
09-21-2008, 08:40 AM
Thoughts from people much more educated on the subject.


Many of the same economists and opinion-makers who'd provided a bipartisan sheen of consensus to Treasury Secretary Henry Paulson's previous moves have quickly begun casting doubts on the wisdom of a policy that would allow Treasury to purchase without oversight hundreds of billions of dollars of difficult-to-price assets from financial institutions.

Under the proposal, Paulson would not have to report to Congress until December, and the only safeguard for taxpayers was a provision that the “Secretary shall take into consideration means for — (1) providing stability or preventing disruption to the financial markets or banking system; and (2) protecting the taxpayer.”

Skepticism toward the plan reflected more than the predictable desires of the left to spread the wealth to Main Street or of the right to reject government bailouts, although those sentiments were also expressed.

Paul Krugman, the Princeton University economist and liberal columnist for The New York Times who had until now been cautiously supportive of Paulson's and Federal Reserve Chairman Ben Bernanke’s efforts to prop up the system, wrote that the new plan would be a taxpayer rip-off. “I hate to say this, but looking at the plan as leaked, I have to say no deal,” he wrote on his blog at 4:46 p.m. Saturday. “Not unless Treasury explains, very clearly, why this is supposed to work, other than through having taxpayers pay premium prices for lousy assets.”

President Bush is “asking for a huge amount of power,” said Nouriel Roubini, an economist at New York University who was among the first to predict the crisis. “He's saying, ‘Trust me, I'm going to do it right if you give me absolute control.' This is not a monarchy.” (Roubini told the New York Times that despite these concerns, he also thought the plan could help stave off a recession.)

Yves Smith, a longtime banker and contributor to the influential finance blog Naked Capitalism, published an angry post there titled, "Why You Should Hate The Treasury Bailout Proposal":

"Given that continuing to buy U.S. assets will come under increasingly harsh scrutiny overseas, the U.S. needs to bend over backwards to devise a plan that at least looks credible in terms of directing the funds that come from taxpayers and lenders to their highest and best uses and implementing reforms that will restore active and prudent oversight of financial firms," she wrote. "The administration's demand for a free pass, even if Congress unwisely goes along, is likely to backfire with our foreign creditors."

Gregory Mankiw, a professor at Harvard University and a former chairman of Bush's Council of Economic Advisers who was the economic guru for Mitt Romney's campaign, favorably linked to Smith's post under the headline "A Blank Check" and approvingly quoted a correspondent who wrote, "Has more money ever been given with fewer restrictions on how it is used? Ever?"

Sebastian Mallaby, the center-right economic columnist for The Washington Post and scholar of the modern financial system, was equally dubious. “The plan is being marketed under false pretenses," he wrote in his Sunday column, rejecting comparisons of the plan to the Resolution Trust Corporation, which the government formed in response to the savings and loan crisis to purchase and sell off the bad loans made by bankrupted thrifts.

“The administration proposes to buy up bad loans before the lenders go bust,” Mallaby noted, keeping the banks alive but doing little to solve the problem infecting the markets. “Bad loans are weighing down the financial system precisely because private-sector experts can't determine their worth. The government would have no better handle on the problem.”

University of Chicago Graduate School of Business economist Luigi Zingales, in a short essay titled "Why Paulson Is Wrong" that was cited by Mallaby and a raft of other economics blogs across the ideological spectrum, wrote: "For somebody like me who believes strongly in the free market system, the most serious risk of the current situation is that the interest of a few financiers will undermine the fundamental workings of the capitalist system. The time has come to save capitalism from the capitalists."

Justin Fox, Time magazine's top financial writer and columnist, also worried about the lack of an upside for the taxpayer. "What I still can't figure out is how Treasury hopes to structure the bailout so there's at least a chance of getting a fair return on that risk-taking," he wrote on his blog.

"How on earth will these things be priced?" Portfolio's Felix Salmon asked about the bad debt Paulson plans to purchase. He also pointed out that Treasury would need to stock its office with bond-trading professionals. "All we know so far is that it's going to be set up as a reverse auction, but that raises more questions than it answers."

One notable proponent of the plan was The Financial Times' unsigned Lex column, which acknowledged the lack of oversight but mostly praised the plan:

"This bailout is necessary and the bill should be pushed through quickly. … Nor is the package necessarily a disaster for the taxpayer or the U.S. dollar. If the Treasury buys assets well, and confidence is restored, there is [a] chance that Mr. Paulson could win fund manager of the year."

DYNASTY HVY
09-21-2008, 01:43 PM
Kind of like throwing good money after bad !:eek:

ryan1234
09-21-2008, 07:30 PM
I could be wrong... and I hope I am.. but I think the dollar might take a dive bomb by begining of next summer........ just a feeling

capncrunch
09-22-2008, 06:27 AM
AIG up 30% to $5 a share....looking like a great call.

ToiletDuck
09-22-2008, 08:39 AM
AIG up 30% to $5 a share....looking like a great call.

Not being rude I just don't know if you're making a joke or not lol. AIG, with it's "loan" from the govt is as risky as it gets right now. The rules the gov't set in place for the loan to go through are a little stiff. It seems more like a way to avoid them from going into BK while they sell off 80% of their assets overtime. Unless they can actually pay the 9%, I think that's it, that the loan was given at.

Interesting read here.

Bloomberg.com: News (http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aSKSoiNbnQY0)

capncrunch
09-22-2008, 11:07 AM
...........................

BigFellor
09-22-2008, 11:37 AM
I just sent letters to my Senators and my Congressman about this issue. Show me ONE thing the government has handled or can do more efficiently or more cost effectively than the private sector and/or market forces. It's time for these politicians (on BOTH sides) to stop pandering to ignorant voters and trying to buy their votes (mortgages).

I'm tired of my money being stolen from me (that would be through the magic of payroll deducted taxes) to prop up and bail out everything from crack *****s with 12 kids to incompetent consumers to businesses that fail because of incompetent leaders and stupid business decisions. LET THEM FAIL. With Uncle Sam in their back pocket, these people have no risk. Risk keeps them somewhat "honest" and has a way of bringing about better decisions. Instead, all these companies are getting with this $700 billion bail out is a blank check with a note that says, "Don't worry about being responsible lenders. Don't worry about making sound decisions. Uncle Sam and the tax payers are here whenever you need some cash!" Sorry, but if you bought a $300,000 house and you make $30,000/yr, it's not my responsibility, through the force of government, to bail your ass out. Go find a cozy bridge.

But, go ahead and scream and cry for MORE government involvement, more regulation, more oversight, bigger government. Anymore in this country, people are more concerned with making sure they have the newest cell phone and who is on Oprah today than things that matter. Why should I worry about anything? It's easier to let the government take care of me. :rolleyes: Sad sad sad.

I should go start handing out $20's to some local homeless people. At least I have control over that. And while we are on this "my money going to bums issue", why in the hell are we giving $80 to every household in this country so they can watch TV in Feb?!?!?

capncrunch
09-22-2008, 12:37 PM
Yes its risky but it also has the opportunity for great rewards....


Reuters
AIG shares jump 27 percent on shareholder plan report
Monday September 22, 12:21 pm ET

NEW YORK (Reuters) - Shares of American International Group Inc (NYSE:AIG - News) rose 27 percent on Monday after a report that some leading shareholders are searching for a way to keep the company from being effectively taken over by the Federal Reserve.


It was the third day of gains for the stock, which hit its all-time low last Tuesday, just before the company was bailed out by the Federal Reserve with an $85 billion loan to help it recover from massive losses it suffered on mortgage derivatives.

Under last week's deal, brokered by Treasury Secretary Henry Paulson, the Federal Reserve would take an almost 80 percent stake in the insurer, diluting the existing shareholders' ownership.

According to a report in the Wall Street Journal on Monday, citing an unnamed person familiar with the matter, major shareholders are looking for ways to quickly sell assets and raise capital to pay off the Federal Reserve loan, thereby keeping AIG independent.

It did not name any shareholders in particular, but noted that AIG investors such as Bill Miller of Legg Mason Inc (NYSE:LM - News) and former AIG director Eli Broad banded together earlier this year in their successful push to remove Martin Sullivan, chief executive of AIG.

AIG shares rose $1.04 to $4.89 on the New York Stock Exchange.

Thedude
09-22-2008, 01:00 PM
AIG shares rose $1.04 to $4.89 on the New York Stock Exchange.


I am glad I bought at $1.75. Just wished I could have purchased more.

Led Zep
09-22-2008, 01:09 PM
I just sent letters to my Senators and my Congressman about this issue. Show me ONE thing the government has handled or can do more efficiently or more cost effectively than the private sector and/or market forces. It's time for these politicians (on BOTH sides) to stop pandering to ignorant voters and trying to buy their votes (mortgages).

I'm tired of my money being stolen from me (that would be through the magic of payroll deducted taxes) to prop up and bail out everything from crack *****s with 12 kids to incompetent consumers to businesses that fail because of incompetent leaders and stupid business decisions. LET THEM FAIL. With Uncle Sam in their back pocket, these people have no risk. Risk keeps them somewhat "honest" and has a way of bringing about better decisions. Instead, all these companies are getting with this $700 billion bail out is a blank check with a note that says, "Don't worry about being responsible lenders. Don't worry about making sound decisions. Uncle Sam and the tax payers are here whenever you need some cash!" Sorry, but if you bought a $300,000 house and you make $30,000/yr, it's not my responsibility, through the force of government, to bail your ass out. Go find a cozy bridge.

But, go ahead and scream and cry for MORE government involvement, more regulation, more oversight, bigger government. Anymore in this country, people are more concerned with making sure they have the newest cell phone and who is on Oprah today than things that matter. Why should I worry about anything? It's easier to let the government take care of me. :rolleyes: Sad sad sad.

I should go start handing out $20's to some local homeless people. At least I have control over that. And while we are on this "my money going to bums issue", why in the hell are we giving $80 to every household in this country so they can watch TV in Feb?!?!?

I just finished reading BigFellor's post and not only did I enjoy it, I agree with him. I personally think he is expressing what most people are thinking but unable to voice publicly.

Our society has morphed to the point where personal and professional accountability for one's actions is almost unheard of nowadays. Is common sense becoming an endangered species? Since when is it the government's responsibility to tell someone whether or not they can or cannot afford a mortgage? Call me stupid, but I just assumed everyone had an idea of money in vs money out (a budget for those of you in Rio Linda) and thus able to tell very easily if a given home is affordable or not.

Who do I blame? Consumer and banks alike.

CONSUMER:
Mortgage contracts are not the same as rocket science. At the very least you can ask what your payments are going to be. If it's a variable interest rate then ask what the payments are going to be like under a wide spectrum of various interest rates. If the numbers scare you, THEN DON'T TAKE THE MORTGAGE until you can afford to do so. And then, only take a fixed-rate mortgage.

There is more. Some homes were appraised at ridiculous values for the sole purpose of borrowing against it. In other words, the bank's ATM wasn't giving enough money so some people decided to install one in the home. Look, if you have to borrow against your home to purchase a plasma t.v. then you fall into one of two categories: a) you have way too much home for your income, or b) you expect way too much t.v. (or other consumer must-have-now product.)

BANKS:
These guys aren't off the hook either. They, out of all people, should have known better than to issue credit to people who were at risk of defaulting on loans. 20 years ago a person with a low income and less-than-stellar credit record would have had trouble qualifying for a $5000.00 loan to purchase a used car. 5 years ago that same person could get a $250K mortgage. HUH?????? What was the purpose of credit checks? Doesn't seem like anyone paid attention to them.

Finally, I blame the government for bailing both parties out. The message being sent is that it is o.k. to take unreasonable risk because someone else will bail you out and excuse you of your actions.

I am a free market capitalist. I obviously like it when the markets do well. Understandably I am not too thrilled when they do bad. But, I understand wholeheartedly that ups and downs are all part of the game. I also understand that, left untouched, the market will take care of itself and rebound. One thing I dislike more than a downturn in the market is a socialistic attempt to nationalize that market. Just leave it alone.

Dark Knight
09-22-2008, 03:58 PM
For every weak bank the gov't bails out of trouble there is probably one or two banks in decent standing that doesn't need a bailout.

Example AIG vs Berkshire Hathaway (they were insurance before flight safety fellas)

I've just skimmed through the thread so I won't go into detail but I will say that we are better off writing our senators and congressmen on this instead of complaining to our peers on a message board.

Let's write or call them and ask them to exercise some fiscal responsibility and not reward predatory lending and ignorant consumers. Why should my taxes be used to save the greedy and the ignorant.

This isn't what my ancestors fought for.

BigFellor
09-22-2008, 05:07 PM
I will say that we are better off writing our senators and congressmen .... Let's write or call them and ask them to exercise some fiscal responsibility and not reward predatory lending and ignorant consumers. Why should my taxes be used to save the greedy and the ignorant.

Already did. Also included a line about "Since you are so freely handing out money, I could use $20k to pay off a student loan. I'm sure I have paid more than that over the years in taxes that went to support someone else."

normajean21
09-22-2008, 07:38 PM
what a surprise...

capncrunch
09-23-2008, 02:27 PM
If these shareholders put this together, which I believe they will, the stock price will jump big. People like Broad and Greenberg have too much money on the line to let the Govt come in for an 80% ownership stake.




Reuters
Investor group working with AIG to thwart Fed takeover
Tuesday September 23, 6:01 pm ET

By Lilla Zuill

NEW YORK (Reuters) - American International Group Inc (NYSE:AIG - News) is cooperating with a large investor group working to thwart a government takeover, a lawyer for investors said.

Representatives of the investor group will be briefed by the company on its financial position as early as Tuesday afternoon, said Mickey Kantor, of law firm Mayer Brown.

CEO Edward Liddy and others at AIG "could not be more cooperative," Kantor added.

AIG declined to comment.

The investor group represents more than a third of all AIG stockholders, including pension funds, and current and retired employees, Kantor said.

"We think it is in the best interest of the company to put some plan in place," he added.

Former CEO Maurice "Hank" Greenberg, AIG's largest individual shareholder, has thrown his support behind the investor group, said a spokesman.

Investors have much at stake. AIG's stock has fallen more than 90 percent over the past year, and will have little chance of recovery if the federal government -- which stepped in to keep the insurer from collapse with an $85 billion credit facility -- exercises warrants for up to 80 percent ownership.

AIG is to repay the government loan with proceeds from asset sales.

On paper, AIG has a net saleable value of $82 billion -- equal to more than $30 a share -- Credit Suisse said in a research note on Tuesday.

The net figure assumes AIG will pay in excess of $30 billion to rid its balance sheet of thorny liabilities, including credit default swaps on mortgage-linked derivatives that triggered $18 billion in losses over the past three quarters.

Shares of AIG closed up 6 percent at $5 Tuesday on the New York Stock Exchange.

Still, analyst Tom Gallagher said investors face hurdles in being able to outmaneuver the government taking majority ownership.

"Some hurdles to getting this done would include raising that much cash in a short amount of time ... and uncertainty over whether there will be a shareholder vote regarding approval of the terms with government."

The New York Insurance Department -- appointed to oversee AIG's insurance operations in the wake of the federal bailout -- would evaluate any proposal presented, said spokesman David Neustadt.

BROAD & CO

Eli Broad, a major AIG shareholder and former director, flew into New York with Kantor from Washington D.C. on Monday to meet with other investors.

"There was a unanimity of opinion," said Kantor, a former U.S. Secretary of Commerce in the Clinton administration, of the tone set in the group's first formal meeting.

Broad has spoken with Liddy by telephone, Kantor said.

In June, Broad, in concert with fund managers Shelby Davis of Davis Selected Advisors LP and Bill Miller of Legg Mason Inc (NYSE:LM - News), were critical of management's handling of massive mortgage losses, leading to then-chief executive Martin Sullivan's ouster.

The internal briefing on the company's financial position, and possible assets for sale, will include several people from AIG, but not new CEO Liddy, Kantor said.

Liddy was in Washington D.C. on Tuesday, along with representatives of the New York Insurance Department, briefing insurance regulators from across the nation on AIG's situation.

The former Allstate Corp (NYSE:ALL - News) chairman took over AIG's helm last week, replacing former Citigroup executive Robert Willumstad, who had been CEO since June 15.

Liddy has said he expects to unveil what parts of AIG are up for sale within the next week to 10 days.

AIG on Tuesday said it will halt its common stock dividend in a bid to conserve capital.