Posts tagged 'AIG FP'

The defeat of an FTC generator

Lisa joined FT Alphaville in September 2011 after a tour of duty through the guts of the financial industry, having worked as an analyst at a bank and for a financial data company.

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| May 25 2012 14:55 | Comment |

The investment that Hewlett-Packard made in an entity called Foppingadreef back in 1996, thinking that it would give rise to significant tax benefits over the next seven years, was not typical of so-called “foreign tax credit generators”.

Barclays’ structured trust advantaged repackaged securities (Stars) are perhaps the most well-known FTC generators and they have allowed multiple US banks to reduce their tax liabilities — though the Internal Revenue Service is challenging this in the courts. Read more

The anatomy of a transaction

Lisa joined FT Alphaville in September 2011 after a tour of duty through the guts of the financial industry, having worked as an analyst at a bank and for a financial data company.

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| May 25 2012 14:45 | Comment |

In our last post, we presented the genesis of a transaction set up by AIG Financial Products in 1996 that stood to reap significant tax benefits by generating an abundance of foreign tax credits (FTCs) as well as a deduction arising from a capital loss.

The Internal Revenue Service fought back when some of the benefits were claimed, and on May 14, 2012 they won in the US Tax Court, leading to the benefits being disallowed. This case, along with another won by the IRS in September last year, allows a rare glimpse into the world of international tax arbitrage. Read more

The genesis of a transaction

Lisa joined FT Alphaville in September 2011 after a tour of duty through the guts of the financial industry, having worked as an analyst at a bank and for a financial data company.

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| May 25 2012 14:35 | Comment |

On May 14th, 2012, the US government won a case against Hewlett-Packard. The company was trying to reduce its tax bill by claiming certain foreign tax credits (FTCs) and a deduction on a capital loss that arose from a transaction it had entered into in 1996 with a Dutch entity called Foppingadreef. Both were claims disallowed in the ruling. The case may go to appeal.

The type of transaction can generally be classified as a so-called “FTC Generator” as one of the main benefits, if not the main benefit, concerns positive tax attributes created by it. Read more

Inefficient market hypothesis

Lisa joined FT Alphaville in September 2011 after a tour of duty through the guts of the financial industry, having worked as an analyst at a bank and for a financial data company.

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| May 25 2012 14:25 | Comment |

Hewlett-Packard recently lost a big tax case with the US IRS. An intricate structure known as an FTC generator was at the heart of this dispute – and it’s left us wondering what the consequences might be for all those institutions so busy in this space over the past decade or two.

Hopefully, this four-part series will walk you through the basics, giving a glimpse into the world of international tax arbitrage…
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Merrill Lynch’s derivatives set sail for safe harbors

Lisa joined FT Alphaville in September 2011 after a tour of duty through the guts of the financial industry, having worked as an analyst at a bank and for a financial data company.

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| Oct 24 2011 18:59 | Comment |

Over the last week, news outlets and bloggers have discussed Bank of America’s move to shift derivatives exposures from its Merrill Lynch unit to its deposit-taking, FDIC-insured bank.

A Bloomberg article kicked the whole thing off: Read more

AIG unwinds soured Goldman trades, WSJ says

Tracy Alloway used to be deputy editor of FT Alphaville. Here she learned the details of derivatives, the absurdities of accounting and the various structures of ... erm ... structured finance. She now covers big US banks for the FT paper, including Goldman Sachs and Morgan Stanley. She pops up on FT Alphaville every once in a while.

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| Apr 12 2010 03:49 | Comment |

AIG’s derivatives unit has unwound most of its troubled mortgage trades with Goldman Sachs, the Wall Street Journal reports, citing people familiar with the matter. AIG Financial Products’ decision to end the credit default swaps,  insuring about $3bn of the “Abacus” mortgage-asset pools arranged by Goldman, led to a loss at AIG of $1.5bn to $2bn last year, the people said. Read more

A lack of surety: Swiss Re and the trade credit collapse

FT Hedge Fund Correspondent

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| Apr 15 2009 11:06 | Comment |

The front page of Wednesday’s FT runs with the following story – that the UK government’s forthcoming budget is to include a “supply-chain insurance plan”:

The scheme will form a centrepiece of the Budget initiatives to help small to medium-sized businesses cope with the recession. Its unveiling marks the culmination of months of negotiations with insurers spearheaded by Lord Mandelson, the business secretary. Read more

Dear AIG…

| Mar 25 2009 13:59 | Comment |

The NY Times on Wednesday featured a strongly-worded and impassioned letter sent by Jake DeSantis, an executive vice president at AIG’s financial products unit to chief executive Edward Liddy.

Here’s the 1,500 word dispatch in full: Read more

Point counter point: AIG, Goldman and the NYT

FT Hedge Fund Correspondent

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| Mar 16 2009 12:17 | Comment |

Does anyone care to remember this story on AIG, from the New York Times, back in September? More to the point, does anyone remember the trouble it caused?

It was one of a series of articles that appeared in the mainstream press contemporaneous to AIG’s bailout that dissected just what the insurer had been doing that made it so risky, and so systemically important. Read more