BUSINESS BRIEFS
AIG admits losing $10 billion more
Associated Press
CHARLOTTE, N.C. — American International Group Inc. said yesterday it is working on resolving nearly $10 billion in soured investments — without asking taxpayers for more money.
The exposure stems from investments in mortgage and corporate debt assets, and may make it more difficult for the battered insurer to repay the federal government for its bailout.
An AIG spokesman confirmed the company's exposure yesterday, after The Wall Street Journal reported the trades may be the first sign that the New York-based insurer has been gambling with its own capital.
The company also said the Journal incorrectly reported yesterday that the $10 billion in trades was a previously undisclosed obligation to AIG counterparties.
The spokesman said the trades in question were not speculative bets but "credit protection instruments," designed to hedge against losses.
NOVEMBER DEFICIT A RECORD $164.4B
WASHINGTON— The federal government registered a record budget deficit for November, reflecting the impact of a recession on tax receipts and the mounting costs of the $700 billion financial rescue program.
The country remains on track to hit a record deficit of $1 trillion or more for the entire year, which would be more than double the previous all-time high set last year.
The Treasury Department said yesterday that the gap between the government's revenue collections and what it paid out last month was $164.4 billion, the largest deficit ever recorded for a November.
In just the first two months of this budget year, the deficit now totals $401.6 billion.
A deficit of $1 trillion for the year would set a new record-high in dollar terms, and would be the largest as a percentage of the overall economy since World War II.
WHOLESALERS CUT THEIR INVENTORIES
WASHINGTON — Wholesalers cut back on their inventories in October by the largest amount since the period following the 2001 terrorist attacks, while their sales plunged by a record amount.
Analysts predict more grim news in the months ahead as the recession deepens.
The Commerce Department reported yesterday that wholesalers, the companies in the supply chain between manufacturers and retailers, reduced their inventories by 1.1 percent in October, the biggest cutback since a similar drop in inventories in November 2001. The inventory decline was much bigger than the 0.2 percent decrease economists expected.
Sales at the wholesale level plunged by 4.1 percent in October, the largest decline on record.
The inventories-to-sales ratio increased to 1.16 in October, up from 1.12 in September. That means that it would take wholesalers 1.16 months to sell off their stockpiles at the current sales pace.
GMAC MIGHT NOT QUALIFY FOR BAILOUT
NEW YORK — GMAC Financial Services, the financing arm of General Motors, said yesterday that its bid to become a bank holding company and qualify for aid under the government's $700 billion bank rescue plan may be in danger because it hasn't raised the capital needed to meet federal requirements.
One analyst said that if GMAC doesn't get the help it needs, it may need to shutter its home mortgage division to prevent the entire company from filing for bankruptcy protection.
It wasn't clear what impact that would have on its owners, the automaker General Motors Corp. and the private equity firm Cerberus Capital Management LP.
But GM, which owns a 49 percent stake in GMAC, did not include any possible federal aid to GMAC in the restructuring plan that the automaker submitted to Congress in an effort to get its own government loans, said a GM spokeswoman.
