AIG’s European Derivatives May Take Decades to Expire

[Joanne98]

July 17 (Bloomberg) -- American International Group Inc.’s trading partners may force the insurer to bear the risk of losses on corporate loans and mortgages for years beyond the company’s expectations, complicating U.S. efforts to stabilize the firm, analysts said.

European banks including Societe Generale SA and BNP Paribas SA hold almost $200 billion in guarantees sold by New York-based AIG allowing the lenders to reduce the capital required for loss reserves. The firms may keep the contracts to hedge against declining assets rather than canceling them as AIG said it expects the banks to do, according to David Havens, managing director at investment bank Hexagon Securities LLC.

“For counterparties to voluntarily terminate those contracts makes no sense,” Havens said in an interview. “There’s no question that asset values have soured on a global basis. With the faith and credit of the U.S. government backing those guarantees, why would they give that up?”

http://www.bloomberg.com/apps/news?pid=20601109&sid=aXu5aUboayJY

:nuke:

[marketcrazy1]

1. so we the taxpayers who own AIG

will soon be paying EURO banks for swaps they bought through AIG!, thats just fucking great!! x(

[notesdev]

2. They wouldn't

if AIG were bankrupt rather than getting bailed out. Bailouts are like Doritos... you can't bail out just one.