Ex AIG chief blames mark-to-market for losses
Congress hears that mark-to-market to blame for huge losses at AIG - but watchdog scoffs at the claim
Mark-to-market accounting has almost killed off the US insurer AIG, according
to its former chief executive Martin Sullivan.
Testifying to a committee of the US congress on the financial crisis,
Sullivan quoted market disruption and ‘multiple action by multiple parties’
,according to the Financial Times.
But, he insisted the most telling factor was the accounting rule which said
meant ‘trillions’ in assets could suddenly see ‘unrealised’ losses running into
tens of billions.
However, former SEC chief accountant Lynn Turner said blaming the accounting
was like blaming a thermometer for a fever.
The FT quotes Turner saying: ‘I don’t think the company was ever honest with
the investors about the potential magnitude of these things, and that is what is
grossly missing here.’
On Monday it was revealed that PricewaterhouseCoopers would pay $97.5m in
damages to shareholders of AIG. The firm had been named in a law suit by three
state pension funds.
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FBI
looks at accounting issues