aig

A report in Thursday's The Wall Street Journal [subscription required] reveals that American International Group (NYSE: AIG) is actually reaping the benefits of its risky bets in the credit-default swap market.

AIG was forced to shell out billions to Wall Street banks amid last year's credit crisis, as the assets backed by the credit-default swaps plummeted in value. However, the market's reversal of fortune means that banking heavyweights, such as Goldman Sachs Group (NYSE: GS), are now returning collateral to the infamous insurance giant.

The American International Group (NYSE: AIG) bonuses controversy took a turn for the bizarre today, when The Financial Times reported that the company had paid $168 million in bonuses and retention payments to 400 employees in the troubled financial products unite between December 2008 and March 2009.

And $7,700 of that amount went to a kitchen assistant.

Look: The point here is not to beat up on "the little guy" and in the grand scheme of AIG's malfeasance, $7,700 to a kitchen assistant isn't that big of a deal.

34 banks opted not to pay their quarterly dividends to the Treasury Department in August -- that's up from the 19 deadbeats for the month of May.

The biggest offenders were American International Group (NYSE: AIG), CIT Group Inc. (NYSE: CIT), First Bancorp (NASDAQ: FBNC) , Sterling Financial Corporation (NASDAQ: STSA), and UCBH Holdings, Inc. (NASDAQ: UCBH).

The Treasury Department provided the USA Today with a pretty condescending explanation: "For some banks, it may be prudent to exercise their right not to pay dividends in a particular month, and we respect their right to do so. To draw any broader conclusions about the state of the banking sector from one month is highly premature and speculative."

Allstate Corp. (NYSE: ALL) has selected former American International Group (NYSE: AIG) executive Matthew Winter to head its struggling life insurance and retirement unit, Allstate Financial.

Allstate Financial returned to profitability in the three months ended June 30 after losing money each quarter since September 2007. The unit has been run by an interim president since January. The ongoing delays had prompted some Wall Street analysts to call on Allstate to sell its small life unit, which was largely responsible for investment losses that led Allstate to post a big loss last year.

Maybe days with no solid economic data are the best after all. The Saudis denied that OPEC was considered moving away from oil being quoted in US Dollars and gold put in new all-time contract highs. T. Boone Pickens was also out with his new 2010 oil price predictions this morning.

Here were today's unofficial closing bell levels:

Dow 9,731.25 +131.50 (1.37%)
S&P 500 1,054.72 +14.26 (1.37%)
Nasdaq 2,103.57 +35.42 (1.71%)

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Top Rumors of the Day

TheStreet.com's Jim Cramer says this year will see the mirror image of last year, when redemptions ended the game for many managers.

One year ago today, a quarter ended that put hundreds of bullish hedge funds out of business. Today, a quarter ends that will put hundreds of bearish hedge funds out of business.

Oh, sure, last year some of the bulls were able to stumble through the fourth quarter, but October was a horror show and they ended up getting huge redemption letters and spending the rest of 2008 selling into the strength of the rally to return capital to investors and lock in losses.

American International (NYSE: AIG) closed at $48.40. AIG options were active on volume of 380,937 contracts on September 21. October and November call option implied volatility is at 140, puts are at 152; above its 26-week average of 109, according to Track Data, suggesting larger price movement. AIG puts are more expensive than calls because AIG is difficult to borrow.

UltraShort Financials ProShares (NYSE: SKF) is recently down 70 cents to $24.71. SKF is an exchange traded fund seeking daily investment results that correspond to twice (200%) the inverse (opposite) of the daily performance of the Dow Jones U.S. Financials Index. SKF October call option implied volatility is at 65, puts are at 59, November is at 63; below its 26-week average of 92, according to Track Data, suggesting decreasing price movement.

Option Update is provided by Stock Specialist Paul Foster of theflyonthewall.com

Late Thursday Sirius XM (NASDAQ: SIRI) disclosed it had received a notice from the Nasdaq stock exchange on Tuesday that its share price has closed below $1 for 30 consecutive days, and is therefore not in compliance with the exchange rules. This means it could possibly be delisted.

Sirius has until March 15, 2010, to regain compliance with the minimum bid price rule, meaning its stock has to close at or above $1 for 10 consecutive business days.

It has been about a year since Lehman Brothers failed and this financial crisis started, and it has hit many of the banks hard including Bank of American (NYSE: BAC), Citigroup (NYSE: C) and America International Group (NYSE: AIG).

There has been one thing that has been bugged me in the coverage of it since then. Frequently, reporters use words like unprecedented or unparalleled to describe it. That is false! Financial crises, panics, crashes, bubbles, and bank failures are really about a dime a dozen.

TheStreet.com's Jim Cramer says everyone in the trenches knows we're better off now -- only the academics disagree.

Am I nuts, or am I missing something? One year after the financial system was brought to its knees, we are back in the mid-9000s and we have taken off the table massive bank risk and are well on our way to recovery.

I keep listening to people like Nobel Prize winner Joseph Stiglitz say the banking system is worse off now and I say to myself, "That's just stupid and wrong and anti-empirical and actually just silly." Anyone who knows what's really going on has to feel this way. And where was Stiglitz when some of us were running around trying to save things?

Today was a strange post-holiday session as US markets really just keyed off of a weak dollar and higher commodity prices. $70+ on oil and $1,000+ gold were a highlight, but all in all this was merely the U.S. playing catch-up on gains after we had an extra day off.

Here were today's unofficial closing bell figures:

Dow 9,497.34 +56.07 (0.59%)
S&P 500 1,025.37 +8.97 (0.88%)
Nasdaq 2,037.77 +18.99 (0.94%)

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Analyst upgrades:

• Bernstein upgraded Lincoln National (NYSE: LNC) to Outperform from Market Perform based on relative valuation and expectations the company will repay TARP without a capital raise. The firm raised its target to $34 from $26.
• Thomas Weisel upgraded Ticketmaster (NASDAQ: TKTM) to Overweight from Market Weight and raised its target to $12 from $8 citing dynamic ticket pricing and the potential merger with Live Nation (NYSE: LYV).
• Citigroup upgraded Harley-Davidson (NYSE: HOG) to Hold from Sell after channel checks indicated retail sales have improved since Q2. The firm raised its target on shares to $26 from $14.
• McDermott (NYSE: MDR) was upgraded to Outperform from Neutral at Credit Suisse.
• Ericsson (NASDAQ: ERIC) was upgraded to Hold from Sell at Deutsche Bank.
• General Electric (NYSE: GE) was upgraded to Overweight from Neutral at JPMorgan.

Robert Benmosche has been CEO of American International Group (NYSE: AIG) for less than a month, but he's already established a reputation as an arrogant jerk -- which is exactly not what AIG needs at this particular moment in history.

Benmosche drew some sharp criticism for his comment that New York Attorney General Andrew Cuomo "doesn't deserve to be in government" and his comment that he will deal with "all those crazies down in Washington."

Those are pretty ambitious comments given that he and every single AIG employee around the globe literally owe their jobs to an unprecedented episode of taxpayer largesse -- brought to you by, at the expense of much well-deserved populist resentment, those "crazies down in Washington."

So you finally get to see some growth figures from the ISM and then the market sells off again. We have enjoyed a heck of a run-up and now trading desks are lightening up to boot as we get closer to the 3-day weekend. Today was such a poor result on the market internals that even all the defensive stocks were dropping. Even inverse-leverage ETF's were getting traction again. Bill Gross's bleak outlook probably only added insult to injury today.

Here are today's unofficial closing bell levels:

Dow 9,310.60 -185.68 (-1.96%)
S&P 500 998.04 -22.58 (-2.21%)
Nasdaq 1,968.89 -40.17 (-2.00%)

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Today's growth being seen in Chicago Purchasing Managers was totally dwarfed by what is still an overbought US stock market. Another big drop in Shanghai and a drop in other major overseas stock markets sealed the fate today. The bears scored another win, but this is just a 'day-two' victory after literally eight or nine days of straight DJIA wins....

Here are today's unofficial closing bell levels:

Dow 9,498.93 -45.27 (-0.47%)
S&P 500 1,020.76 -8.17 (-0.79%)
Nasdaq 2,009.06 -19.71 (-0.97%)

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