Chicago’s Mayor Hits AIG Bailout; Other Midwest Officials More Positive

Midwestern reaction to the bail out of insurance giant American International Group (AIG) varies by regions and officials.

In Chicago Mayor Richard Daley is not happy about the Federal Reserve Bank’s decision to provide an $85 million bailout of insurance giant AIG.

On Wednesday, Sept. 17, Daley said the money would be better spent on education.

Daley said he feels sorry for the people of the United States. He said the nation doesn’t have enough money for education, but it has enough money to bail fix every problem on Wall Street.

The bailout of AIG is the second time this month the feds put taxpayer money on the hook to rescue a private financial company. Officials say the failure of AIG would further disrupt markets and threaten the already fragile economy.

AIG said it will repay the money in full with proceeds from the sales of some of its assets.

Yesterday, (September 18) former head of Northbrook, Ill.-based Allstate Insurance Company Edward Liddy took over the helm of AIG as its new CEO.

“My intention is not to liquidate the company,” said Liddy, speaking with employees on Thursday. He also said AIG’s insurance operations were well-funded, and that the company’s “mess is solvable.”

Ohio, South Dakota, North Dakota
Insurance regulators in some other neighboring states have delivered a more positive message to consumers. State regulators say Ohio consumers with AIG insurance have no reason to fear, despite concerns about the company.

Financial giant AIG’s poor health has prompted the Federal Reserve to provide a bailout loan, but Ohio insurance regulator Mary Jo Hudson said say AIG’s insurance units are solvent and able to pay claims.

Hudson said on Sept. 17 that the agency is monitoring the situation closely.

In South Dakota the head of the insurance division says the government bailout of insurer AIG will have little impact in that state.

Insurance Director Merle Scheiber says none of the 42 AIG insurance companies licensed in South Dakota face “imminent financial problems.”

As Ohio said, Scheiber maintains that AIG’s problems stem from its holding company and not the licensed insurance companies doing business in his state.

Neighbor North Dakota also weighed in when its insurance commissioner said the AIG insurance companies that do business in that state are running normally.

Adam Hamm says the AIG holding company has 20 property and casualty insurers licensed to do business in North Dakota. There are 11 life and health insurance companies.

Hamm says the AIG companies collected $66.8 million in premiums last year. Nationally, AIG insurers collected more than $151 billion in premiums.

Hamm says the AIG companies in North Dakota are in business and paying claims. He says any policyholders with questions should call their insurance agent or the state Insurance Department.

Information from: Chicago Tribune, http://www.chicagotribune.com