Readers of this Blog are aware that I have been on a campaign against the Mortgage Insurance Industry. In particular I have been as loud as I can be regarding the continued participation of AIG – UGI in this business.
My anger on this topic comes in part because I saw with my own eyes how mortgage insurance was being misused. In my view a significant portion of our current problems come from the excess leverage and bad borrowers that were the result.
I am please to report to you that AIG – UGI is going out of business. The following is a link with the details:
http://www.bloomberg.com/apps/news?pid=20601087&sid=aacp8qhi44lk&refer=home
This is a positive development. It is the ‘right thing to do’. AIG is owned by the taxpayers. The taxpayers should not be in the high-risk mortgage business.
I would be interested to know how this decision was made. Either Mr. Lockhart at FHFA and the folks at FNM and FRE said, “We just can’t do this any longer. It looks bad", or Mr. Bernanke said, “Enough is enough”. It was certainly not a choice made by the company.
If AIG – UGI stops writing new business its ability to pay claims will be further impaired. No doubt but that the taxpayers will pay for the closing of this company. We already kicked in $2.8 billion in 2008 for UGI’s losses.
There should be a look back at the transactions that have been booked by AIG-UGI since the government intervention in AIG. Some bankers made some nice money taking advantage of UGI-AIG/Fannie Mae in the past nine months. That should not have happened.
I have had some ‘off the grid’ email regarding things that I have written regarding AIG-UGI. I understand that some may be angry with me. I am not responsible for the problems with AIG. I just write about them. I am however, not at all happy that some very good folks in Greensboro NC will be impacted by this.
Bruce Krasting
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