Griftopia – by Matt Taibbi

2011 - Book - Griftopia, by Matt Taibbi --- [BonkNote]
- AIG, Win Neuger, Securities Lending, Eric Dinallo, Doug Slape

(p112 / 113 of 251) - Dinallo here interjects with what he calls a "powerful" piece of information—that during this period when Goldman and all the other counterparties suddenly started pulling cash out of AIG's securities-lending business, no other sec-lending firm on Wall Street was having anything like the same problems. If Neuger's counterparties were pulling their cash out en masse, it didn't seem to be because they were worried about the value of the securities they were holding. Something else was going on.
(p113 of 251) - "So what's the coincidence of that?" asks Dinallo. "It was clearly a result of what was going on in the financial products division."

(p113 of 251) - In fact, the situation grew dire enough that by the first week of September, Texas—which was home to some of AIG's biggest subsidiary insurance companies and would have been affected disproportionately if AIG tried to raid those companies' holdings—had drawn up a draft letter outlining its plans to seize control of four AIG subsidiary companies, including American General.
(p113 of 251) - "We got active in stepping in to protect those companies from being swallowed up in what was happening with the overall AIG picture," says Doug Slape of the Texas Department of Insurance.
(p113 of 251) - "Texas was definitely very aggressive," says [Eric] Dinallo

(p114 of 251) - It gets worse. Had Texas gone ahead and seized those subsidiaries, all the other states that had AIG subsidiaries headquartered within their borders would almost certainly have followed suit. A full-blown run on AIG's subsidiary holdings would likely have gone into effect, creating a real-world financial catastrophe. "It would have been ugly," says Dinallo. Thousands if not tens or hundreds of thousands of people would have seen their retirement and insurance nest eggs depleted to a fraction of their value, overnight.