wnyc.org / 93.9fm / am 820

what an awesome guest!

Hi everyone,
As I said on the show, insurance consumers do get some protections (I compared it to the FDIC protections on deposits). Insurers have to cover their obligations with reserves that, by law, can't be tampered with when a company is in trouble.

With mutual funds, you're subject to the value of your holdings--as anyone who invested in AIG stock sees today. I'll reiterate my main advice: talk to your broker.

Hi Dorothy and Giuseppe,
You're right that annuities are not covered by the FDIC ... I said on the show that there are similar consumer protections in place for people who hold insurance. Mutual funds are an area where you are always at your own risk -- as anyone who has invested in AIG can see today. Thanks.

A caller wondered if mutual fund accounts were covered by FDIC. The answer
is no, FDIC only covers deposits at commercial banks. However, securities
held in brokerage accounts are covered up to $500,000 by a similar, but
private organization, namely, SIPC
(http://www.sipc.org/how/sipcprotects.cfm). Nearly all brokerage firms in
the US are member of the SIPC. Because account holdings at SIPC-insured
accounts (virtually all brokers in the US) must be segregated from the
brokerage firm portfolio, there has been very little intervention of this
type.

Unfortunately, there does not seem to be any similar coverage for mutual
fonds which are not held within a brokerage account:
http://www.smartmoney.com/ask/index.cfm?story=19990831 Since most retail
investment firms offer low fee or no-fee brokerage accounts, this is one
more argument in favor of holding mutual funds in a brokerage account.

http://www.frbsf.org/publications/consumer/products.html#annuity

The BW Senior Editor gave out some very wrong information. I checked on annuities because when she said they're insured by FDIC I knew that was incorrect. The link above is to the San Fran Federal Reserve Bank. I'm concerned about the caller who had an AIG annuity and was worried about its safety. She now thinks she's OK and maybe she's not.

If the government protects all these insurance company offerings aren't they the real insurance source? If that is the case, that the government takes on the real risk, then shouldn't the government make the profits?

We could outsource the oversight to the private sector with appropriate incentives for catching inefficiencies and corruption but lets be honest with ourselves. It looks like upside-down wealth distribution to me!

PS: Paul.. (#11) go see my blog for 11 rules that will restore the country (similar to FDR's version of socialism, aka THE NEW deal)....

The GOVERNMENT caused the problem when Phil Gramm suggested we REMOVE the Glass-Stengel act that SEPARATED banks and brokerage houses.

We need a TRUTH and Reconciliation commission to INVESTIGATE and BRING the TRUTHS to OUR country.

Without the ability of a T&R commission to give IMMUNITY to those who tell the TRUTH
WE will NEVER get this finished, out and TRUE

Go see my blog.. especially Brian's Producers!!!

and tell Brian to stop black-listing my calls!

Welcome to capitalism.... where are all the "let market forces rule" cheerleaders now?

Socialism anyone?

In regards to reinsurance and just how big AIG is. Brian suggested AIG could get reinsurance from an even "bigger insurer like Lloyds of London."
AIG is approximately 10 to 12 times larger than "Lloyds of London" (which is an insurance market just like the NYSE not an actual insurance company). It is more likely that your XYZ life/auto/home/malpractice policy is reinsured by AIG.

If a taxpayer bailout is given to AIG later, would any of it come from the state rather than the federal gov't.? Is that at all implied by the governor's statement that no taxpayer money is going to AIG now?

MAIN problem:

It ain't the people with the policies, it's the people with the STOCK that will be affected.

Problem is as guest said.

People went In to market to make BIG money.

Too bad it was all based on a HUGE fraud
That of taking a loan (or credit debt)
and selling it to SOMEONE ELSE
as a security

THAT is the TOTAL essence of the CURRENT CRISIS

see my blog for more...
sos-newdeal.blogspot.com

The fact that all these companies started to sell their loans as "safe" (as insured by AIG)...

caused the panic and loads of levels

The fall of all of these companies are surely evidence that we are all living beyond our means--the government, business and individuals=we.

How will AIG's demise affect other insurance companies here in NYC?

The federal gov’t asked Goldman Sachs and JP Morgan to help AIG raise the $75 B.
Considering Goldman’s earnings report today that’s going to be a tough task for them

Can AIG borrow money at a discounted rate at the Fed Window, to cover for its collateral?

I know it is a lot of money ($75 billion, or about $55 billion more than it has now), but the risk to the economy is a large from AIG's bankruptcy. Again, it is not a bailout, but only temporarily lending the money.

Brian - Please ask about AIG's annuities. I considered at one time an AIG fixed annuity through Vanguard but decided to wait. I do know people with AIG annuities and wonder what's going to happen to them. (BTW, Vanguard still sells AIG annuities on their site.)

if I have an AIG homeowners policy, should I switch insurance companies now (before my next premium is due)?

Cheers to Bloomberg, for inviting corporate greed to NYC, luring out of towners to NYC with luxury housing and materialistic gains, pushing the poor out of neighborhoods to suit the rich. Now all of these spoil arrogant greedy wall street players can all default on their million dollar condos and head back home out of nyc and know what it feels like to be forced out, and lets see Mr Mayor who will buy these million dollar condos now and rent these over priced apartment rentals that they have helped drive up hip hip hurray, hip hip hurray the market has finally come home to roost lets give bloomberg another (4) years!!!