AIG - Is Your Money Safe?
Turning attention to personal finance for moment, many Americans are wondering if they're protected, should they have a claim involving AIG ?
The short answer is, yes. After hours AIG came out and eased concerns of policy holders by saying it’s businesses continue to operate normally, it remains adequately capitalized and it’s fully able to meet obligations to policy holders.
And even if an insurance company becomes insolvent, and the company’s policies are not sold off to other insurance companies, state guaranty funds will step in.
Typical State Guaranty Fund Payouts To Policy Holders:
$300,000 in life insurance death benefits
$100,000 in cash surrender or withdrawal value for life insurance
$100,000 in withdrawal and cash values for annuities
$100,000 in health insurance policy benefits
Source: Dave Evans, Independent Insurance Agents of America; NOLHGA
For Main Street that comes as a relief. Unfortunately, Wall Street isn’t so lucky. If you’re an investor it could get bleak.
In a piece published by the New York Times money manger Michael Lewitt writes, “Wall Street isn’t remotely prepared for the inestimable damage the financial system would suffer if A.I.G. collapsed.”
“AIG has tentacles everywhere,” explains Lewitt on Fast Money. “And if it's unable to meet its obligations every institution with whom it does business is going to have one kind of problem or another.”
He goes on to explain that AIG “plays an integral role in several key markets: credit derivatives, mortgages, corporate loans and hedge funds."
Here’s where it gets really bleak.
"If something is not done (to help AIG), a lot of what was done with Bear, Freddie, Fannie will be for naught. Because we’re going to have some serious permanent systemic damage that’s going to take a very long time to unwind.”
We'll be watching.
Got something to to say? Send us an e-mail at email@example.com and your comment might be posted on the Rapid Recap. If you'd prefer to make a comment but not have it published on our website send those e-mails to firstname.lastname@example.org.
Trader disclosure: On Sept 16, 2008, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Macke Owns (MSFT), (WMT), (UUP): Adami Owns (AGU), (BTU), (C), (GS), (INTC), (MSFT), (NUE); Finerman Owns (GS); Finerman's Firm Owns (DVN), (GE), (MSFT), (NOK), (SUN), (TSO), (VLO), (PM); Finerman's Firm Is Short (XLF), (IYR), (IJR), (MDY), (SPY), (IWM); Finerman's Firm Owns (DNA) Calls ; Najarian Owns (AAPL) And (AAPL) Collar; Najarian Owns (AIG) And Is Short (AIG) Calls; Najarian Owns (MS) And (MS) Put Spread And Is Short (MS) Calls; Najarian Owns (NOK) And Is Short (NOK) Calls; Najarian Owns (RIMM) Call Spread; Najarian Owns (TSO) Call Spread; Najarian Owns (WB) Put Spread; Najarian Owns (WM) And (WM) Puts; Najarian Owns (XLF) And (XLF) Collar
GE Is The Parent Company Of CNBC