Can AIG stay on top? - Knowledge@Wharton

My sense is that AIG is the subject of a witch hunt, and a board of directors that, in a post Enron world, is just a little trigger - happy. Article on AIG for Knowledge@Wharton For a very useful background & set of introductory links to Finite Risk insurance check this engtry on Doug Simpson's blog. I reviewed posts on the Yahoo.com AIG message board yesterday. A number of commenters imply that AIG's woes with Elliot Spitzer are reminiscent of Enron, Worldcom etc. Two things strike me. Firstly, the nature magnitude of the transactions in question is dwarfed by AIG's earnings, which themselves are exceeded by AIG's cash flows from operations. Secondly, upon reviewing the recent 8K in which AIG announces a possible charge to book value, I am struck by how the transactions tended to have a zero effect on Net Income, but instead, were used ot manipulate profitability in a particular line of business. One transaction, for example, converted losses in the Auto Insurance line into capital losses - which would have been reported elsewhere in the income statement. This to me points to Greenberg's hubris, and desire to make the results reflect his vanity more than wholesale attempt to mislead.