Here’s a good glimpse into what this looks like: http://www.beaconintegration.com/resources/merger-blog/2009/04/divestiture-and-business-carve-out-technology-considerations/

Often this can take a up to a year or more to complete for large, complex divisions. And, it’s not uncommon for this to cause substantial delay before the selling company gets its cash. So, an investor needs to be weary about a cash starved company selling off divisions to raise capital, often, it will come too late.

http://www.nytimes.com/2009/07/10/business/10insure.html?ref=business

They just can't help themselves, can they? This is as clear-cut an example of an objectively criminal culture as you're going to see.

And who knows – given how the people seem to have regressed from open outrage to their more normal apathy, perhaps AIG will get away with it this time.

They didn't have enough cash to continue operations, let alone begin to make their debt whole. That leaves what as equity?

For those who may be less familiar with things, the gov't had to invent equity in AIG, and then invent some more. If they own more than 80% of AIG, then it has to come onto the books of the Govt.

The fairy tale of AIG equity is much more about politics, and federal budgets.

They can't just give money to AIG, that would be unfair. They can buy some worthless stock from them.

Tim-We want preferred stock, not that common stock crap.

GS-Ok, you drive a hard bargin Timmy, here it is, bend over.

How long till Citi turns this sharp knife of the truth on itself?

>Maybe Shanker mixed up this report on Citi and this is really just a leak about Citi going under along with AIG?

See me here: I Feel Pretty
http://www.youtube.com/watch?v=W9sE55QzXlo&feature=related

and a new internet meme is born. bravo!

AIG 10-K
http://idea.sec.gov/Archives/edgar/data/5272/000095012309003734/y74794e10vk.htm

On page 263, it shows that AIGFP as of December 31, 2008 had $1.515 trillion in derivatives with $305 billion in CDSs outstanding. 2/3 of them were for 2 or more years. 57% were in the 2-5 year range.

Of the ~$305 billion in CDSs as you point out $234 billion is in the form of regulatory relief CDSs written primarily for European banks. These allowed the banks to make more and riskier investments. They could dip more deeply into their reserves than the regulations normally allowed and AIG guaranteed to make up whatever they needed to bring their reserves to what they needed to be according to the European regulators.
Given all the losses that European banks have experienced I would think that there could be significant losses in these.

About those potential losses it has this to say on page 268:

"Given the level of uncertainty in estimating both the number of counterparties who may elect to exercise their right to terminate and the payment that may be triggered in connection with any such exercise, AIG is unable to reasonably estimate the aggregate amount that it would be required to pay under the super senior credit default swaps in the event of any credit rating downgrade below AIG’s current ratings.

Due to long-term maturities of the CDS in the arbitrage portfolio, AIG is unable to make reasonable estimates of the periods during which any payments would be made. However, the net notional amount represents the maximum exposure to loss on the super senior credit default swap portfolio. "

It says much the same about collateral calls, i.e. it doesn’t know.

As for the rest of it, $883 billion are in interest rate swaps. There are also $194 billion in currency swaps and $132 billion in various options. But the 10-K says that AIG has both sides of all these, so it’s covered.

So very short version. AIG has $305 billion in CDSs. 2/3 of these are for 2 or more years and 3/4 of them at least could experience real losses.