BUSINESS BRIEFS
AIG getting $30B more in government bailouts
Advertiser News Services
NEW YORK — American International Group went back to the well of government bailouts for a fourth time yesterday as it reported a $61.7 billion fourth-quarter loss that was the largest quarterly loss in corporate history.
The government said in a statement it will provide the insurance giant with $30 billion of new capital to "stabilize the financial system," and won't shy away from giving future help.
The Treasury Department and Federal Reserve stressed the need to step in with more assistance, saying, "AIG provides insurance protection to more than 100,000 entities, including small businesses, municipalities ... and companies who together employ over 100 million Americans."
AIG insures everything from property and casualty to life. However, its problems stem from its financial service unit, where it sold complex contracts such as credit-default swaps that act as insurance to protect investors against default in a range of assets, including subprime mortgages and corporate bonds. Investors pay AIG regular payments to buy the swaps.
As the credit markets froze up in the fourth quarter of 2008, defaults rose and investors demanded payouts. But AIG found itself short of funds because it, too, had invested the premiums in residential and commercial mortgage-backed securities, whose values fell dramatically.
FREDDIE MAC CEO IS STEPPING DOWN
WASHINGTON — The top executive of Freddie Mac is quitting after less than six months on the job as the company continues to hemorrhage from mortgage losses and plans to ask the government for up to $35 billion in additional aid.Freddie Mac said yesterday that David Moffett will step down as chief executive and leave the company's board of directors by March 13.
Moffett, 57, a former vice chairman of US Bancorp, has been CEO since September, when the government seized control of the mortgage finance company and its sibling Fannie Mae.
Freddie Mac said its board is working with the Federal Housing Finance Agency to appoint a successor to Moffett.
OIL PRICES DROP MORE THAN 10%
SIOUX FALLS, S.D. — Oil prices plummeted more than 10 percent yesterday with little to suggest energy demand will recover in the deteriorating global economy.Benchmark crude for April delivery fell $4.61 to settle at $40.15 a barrel on the New York Mercantile Exchange. In London, the price for Brent crude fell nearly 9 percent, or $4.14, to settle at $42.21 on the ICE Futures exchange.
Oil prices dipped below $40 per barrel for the first time since a three-day rally last week. Prices began to fall Friday and the sell-off continued yesterday.
NORTEL SEES LOSS WIDEN FOR QUARTER
TORONTO — Nortel Networks Corp., a major telecom equipment company now operating under bankruptcy protection, said its fourth-quarter loss widened as the weak economy led customers to lower or defer spending.Toronto-based Nortel yesterday reported a loss of $2.14 billion, or $4.28 per share, compared with a loss of $844 million, or $1.70 per share, a year ago.
Nortel filed for creditor protection Jan. 14 in Canada and the United States, becoming the first major technology company to take that step in this global downturn.
DISH NETWORK'S FEES BOOST PROFIT
Dish Network Corp. yesterday said its fourth-quarter profit rose 24 percent on the back of higher prices and fees, but the satellite-TV provider lost more than 100,000 subscribers and its results missed Wall Street forecasts. Its shares fell more than 10 percent.The nation's second-largest satellite TV provider, which aims to be the low-priced leader among pay-TV providers, said its position was eroded by discounting at rival cable and phone companies, according to a filing with the Securities and Exchange Commission.
