Will AIG Domino Fall Next?

Will American International Group be the next domino to fall? That seems to be the bet on Wall Street, as the company's common stock price fell over 65% just after noon Sept. 15 from its close on Sept. 12, off $7.89 to $4.25. Other media outlets are reporting that AIG will offer a restructuring plan, and the company has reportedly contacted the Federal Reserve seeking a bridge loan. AIG said it was unable to confirm this information. Standard & Poor's placed AIG on CreditWatch with negative implications on Sept. 12. "We believe that AIG has sufficient capital and liquidity to meet its policy obligations and potential collateral requirements, which are significantly greater than the expected cash losses on the mortgage-related assets," said S&P credit analyst Rodney Clark. "However, additional market value losses will place some strain on the company's resources." S&P added that AIG's access to the capital market may be more restricted in the short term. AIG reported a net loss of $5.86 billion ($2.06 per share) for the second quarter, compared with net income of $4.28 billion ($1.64 per share) a year earlier. The effect of capital markets unrealized losses on AIG's super senior credit default swaps was $3.6 billion. Operating losses at AIG's United Guaranty Corp. mortgage insurance subsidiary totaled $440 million for the quarter.