AIG's Christmas present

This was AIG last week, denying that they had more losses.

Lewis said the insurer normally marks the value of the assets underlying swaps to market levels since it is taking some risk in the transactions. The swaps with the European banks are different because they didn’t insure against losses, he said. Instead, they were bought to take advantage of European accounting rules that allow the banks to use the swaps to reduce the capital they’re required to set aside as loss reserves.

You have to read the whole post, to get the extent of their obfuscation.
http://aaronandmoses.blogspot.com/2008/12/more-losses-for-aig-again.html

Today we find out that the taxpayer took on another $16 of CDO's coughing up another $6.7 billion of taxpayer money.

The purchase of the additional $16 billion of multi-sector CDOs was funded by a net payment to counterparties of approximately $6.7 billion and the surrender by AIGFP of approximately $9.2 billion in collateral previously posted by AIGFP to CDS counterparties in respect of the terminated CDS.
http://biz.yahoo.com/bw/081224/20081224005064.html?.v=1

The taxpayer, or Maiden Lane III stepped up to the plate:

American International Group, Inc. (AIG) today announced that Maiden Lane III LLC (ML III), a financing entity recently created by the Federal Reserve Bank of New York (FRBNY) and AIG, has purchased an additional $16 billion in par amount of multi-sector collateralized debt obligations (Multi-Sector CDOs). As a result, the associated credit default swap contracts and similar instruments (CDS) written by AIG Financial Products Corp. (AIGFP) have been terminated.

AIG still has another $12.3 billion, that they need to work-out. So far, the taxpayer/Maiden Lane III has now taken over $62 billion from AIG.

AIG makes Madoff look like a piker!