Magazine article American Banker

AIG Ruling Overturned; Staley Faces the Music

Magazine article American Banker

AIG Ruling Overturned; Staley Faces the Music

Article excerpt

Byline: George Yacik

Receiving Wide Coverage ...

Vacated: A federal appeals court threw out a lower court's ruling that the 2008 federal bailout of American International Group was unlawful, taking a victory away from former CEO Maurice R. "Hank" Greenberg. Greenberg, who built AIG into a financial services and insurance giant, sued the government in 2011, arguing the Federal Reserve overstepped its authority when it took an 80% equity stake in the company in exchange for an $85 billion bailout during the financial crisis. In Tuesday's ruling, the appellate panel ruled in favor of the government. It also ruled the lower court had not erred in denying AIG's shareholders up to $40 billion in damages they had sought as a result of the government takeover. Wall Street Journal, Financial Times, New York Times

Wall Street Journal

Real estate red flags: S&P Global Ratings said banks could face trouble in the commercial real estate market as portfolios grow. Average CRE loans on banks' balance sheets reached a record $1.63 trillion at the end of last year, surpassing the previous peak of $1.52 trillion in 2008. "In an environment of interest-rate increases, such high asset values add risk for banks, given their heavy exposure to the sector," the paper said.

In the residential sector, higher costs for lumber, labor and financing may be putting pressure on the housing market, the paper warns. "And since housing helps drive spending of everything from cars to couches, the risk is the economy may end up on a shakier foundation."

On the other side of the border, troubled Canadian mortgage lender Home Capital Group, which has been battling a run on deposits the past few weeks, has agreed to sell as much as C$1.5 billion (U.S. $1.1 billion) of mortgages to an unidentified buyer to raise capital. The Toronto-based company said the deal allows the unidentified buyer to purchase additional loans in the future. …

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