AIG refuses to commit to oversight over credit derivatives
What can we expect an Arrogant, Incompetent and Greedy corporation to do next? Financial Times is reporting that AIG recently refused to commit itself to international transparency standards over its credit derivatives:
The unit that all but destroyed AIG has failed to sign up for the overhaul of the global derivatives market which was given added impetus by the troubles at the US insurance group.
AIG confirmed that its financial products unit, whose soured bets on credit default swaps forced the company into government hands last year, did not adopt the “Big Bang” protocol that has been signed by more than 2,000 market participants.
The protocol, created under the auspices of International Swaps & Derivatives Association, is intended to make it easier for investors in the opaque market for credit derivatives to know what will happen to their contracts if debt defaults occur. It came into force on Wednesday.
Need I remind you that AIG is 80% owned by the US government? Why aren’t they forcing its hand? They even had to gall to pretend they’re working on it:
“We fully intend to adhere to the protocol but for technical reasons have decided to do so through bilateral agreements with our counterparties,” AIG said. Company officials added that for simpler transactions, such as CDSs written on individual corporate bonds, AIG FP would adopt a contract similar to the protocol.
AIG FP’s move raised eyebrows, with worries that because AIG is not a signatory to the new credit derivatives regime, it could choose not to abide by a credit event ruling.
Anyone willing to bet againstthe possbility AIG is headed for more bailouts?