5 questions: Why AIG matters to you

Customers are wondering if the insurer’s woes will affect them. Here’s why you should care – even if you aren’t a customer. By Chris Isidore, CNNMoney.com senior writer   Last Updated: September 16, 2008: 2:46 PM EDT NEW YORK (CNNMoney.com) — American International Group is the world’s largest insurer and at the moment, Wall Street’s biggest worry. The insurer is struggling to raise cash while economists and investors debate whether or not it should get a government bailout. Despite the company’s importance, the average American is probably not sure how, or why, its problems will affect them. Here are five key questions and answers about AIG’s current woes and what they mean to you. I have insurance through AIG. How worried should I be about the problems at the company? At least in the short term, you probably don’t need to be worried at all. The problems are with the AIG holding company, not the individual insurance company subsidiaries that you do business with, according to a source with New York State’s insurance regulator. Even if AIG’s holding company is forced to file for bankruptcy court protection, there’s a good chance that the subsidiaries will continue to operate normally with no disruption in claims payments. That has happened in the case of other insurance holding companies bankruptcies in the past, such as Conseco (CNO). What guarantees are there that my claims will be paid? Typically, if an insurance company falls into financial distress and is at risk of having claims that exceed the assets it holds to make those payments, the insurance regulator in its home state will take control of the firm and make payments. The state regulator will not only use the firm’s own assets to make those payments but if necessary can also make payments out of a state fund into which all insurers in the state are required to pay. This guarantee applies not just to traditional insurance policies but also to retirement products that have a promised payout, such as annuities. But there are limits to the payments that will be made to customers that vary depending on which state a particular AIG subsidiary is based, according to Joseph Belth, professor emeritus of insurance at Indiana University and editor of The Insurance Forum, a newsletter often critical of the industry. Should I be thinking about changing my policy away from AIG to another insurer? While credit rating agencies downgraded debt held by AIG (AIG, Fortune 500) on Monday, AIG’s ratings are still considered investment grade and the company’s insurance subsidiaries are considered to be secure, at least for now. Belth said changing insurers is not a simple decision. “A lot depends on what kind of insurance you talk about,” he said. “If you’re talking about life insurance, you have to think about whether you can qualify with a new insurer, if your health has changed. But it’s something you have to consider if the ratings decline into the vulnerable range.” Why should I care about problems at AIG if I’m not a customer? AIG is by far the world’s largest insurer and its stock is found in many mutual funds, including any S&P 500 index fund. It is also a component of the Dow Jones industrial average. All by itself, it’s been responsible for dragging the Dow down more than 400 points so far this year. AIG is also active in the business of credit default swaps, complicated financial instruments used by investors to protect themselves from bond defaults. Lehman Brothers (LEH, Fortune 500) was another major player in that field. If both go away, it would create a tighter credit market for consumers and businesses trying to get loans. For this reason, there is a debate about whether the Federal Reserve will agree to lend the company the tens of billions of dollars it needs to cover its short-term funding needs or if the Fed will try and get private firms to assist AIG instead. AIG is an insurer, not a lender. Why do I keep hearing about its problems with subprime mortgages? All insurers take money they collect in premiums and invest them in different forms of assets. The idea is to make money on those investments so that the insurer can keep their premiums low and attract more clients. But AIG made a bigger investment into securities that were backed by subprime mortgages than most other insurers. As defaults and foreclosures of those loans rose, the value of those securities fell, creating big problems for the firm. In the past nine months, AIG has reported net losses of more than $18 billion, largely due to its exposure to bad mortgages.  First Published: September 16, 2008: 12:19 PM EDT

Find this article at: http://money.cnn.com/2008/09/16/news/companies/aig_questions/index.htm?eref=rss_topstories

Marty Markowitz steers big bucks to nonprofit without city scrutiny

BY ERIN EINHORN
DAILY NEWS STAFF WRITER

Tuesday, September 16th 2008, 2:43 AM

Ward for News

Marty Markowitz

Brooklyn Borough President Marty Markowitz directed nearly $700,000 in city contracts to a nonprofit he controls – sometimes in amounts just small enough to avoid public scrutiny.

It’s an ethically questionable arrangement that stunned government watchdog Dick Dadey of the Citizens Union when he was told about it by the Daily News.

“If it’s not illegal, it certainly raises some very serious ethical questions and it should be banned,” Dadey said.

“There’s too much opportunity for corruption or the appearance of corruption.”

From 2004 through June 2008, Markowitz doled out $680,496 in taxpayer dollars to his organization, Best of Brooklyn Inc., without competitive bidding or approval from other city agencies or boards.

Among the 18 no-bid contracts were four issued for exactly $24,999 on the same day in 2005.

At the time, city law required contracts worth $25,000 or more to be filed and reviewed by the city controller while smaller contracts got largely no scrutiny.

That threshold was dropped to $5,000 this year in the wake of a City Council spending scandal.

“If there’s four contracts on the same day, just below the amount that needs to be reported, that raises questions as to their purpose,” said Ross Sandler, head ofNew York Law School’s Center for New York City Law. “Youhave to be hiding something to set up a series of contracts like that.”

If the contracts were really a $99,996 contract broken into four parts to avoid public scrutiny, it would violate the law, cityController William Thompson said.

Markowitz created Best of Brooklyn Inc. in 2002, shortly after becoming borough president.

The group gets about half of itsroughly $1 million budget from private donors. The rest comes from the city and state, including money from Markowitz and others.

It promotes Brooklyn tourism, sends poor kids to summer camp and is the force behind events like the Brooklyn Book Festival and Lighten Up Brooklyn, a weight-loss campaign.

The group is essentially a branch of Markowitz’s office, with headquarters in Borough Hall. Three of its seven board members are on Markowitz’s staff, including its executive director, vice president and secretary-treasurer.

Markowitz, Best of Brooklyn’s honorary chairman, got a waiver from the city’s Conflicts of Interest Board to allow his staffers to work for Best of Brooklyn on government time – and to pay Best of Brooklyn Executive Director Carolyn Greer $20,000 above her $94,000 city salary.

Markowitz said the four contracts on the same day were each for different purposes – tourism promotion, a cultural event, sending poor kids to summer camps and helping teens get jobs. The identical amount was coincidental, he said.

Markowitz said it would be impractical to competitively bid each contract, most of which he said are small. “By the time we put it out to bid, we couldn’t get anything done,” he said.

Asked why he allocated money to Best of Brooklyn, which mostly hires consultants to do its work, rather than hiring those consultants through his office or assigning the tasks to his 89 employees, he said the setup allows the group to tap into private donations, too.

“I’m thrilled that Best of Brooklyn has received the public and private support it has, and proud of what we’ve been able to accomplish,” he said.

eeinhorn@nydailynews.com

With Benjamin Lesser, Rachel Monahan, and Veronika Belenkaya

Football Invigorates Historically Black College

By JOHN BRANCH

WEST GROVE, Pa. — The new Lincoln University football team, in its Tide-orange jerseys, gathered near the equipment shed on the hill behind the end zone. It was two hours before Saturday’s kickoff, and buses from campus began arriving at the parking lot nearby. Out spilled the cheerleaders. Then came members of the band, crisply costumed all the way to the orange tassels atop their chin-strapped hats.

Tweet! Tweet! Tweet! The drum major blew the whistle, and the drum line pounded a marching beat. Hips swayed and feet shuffled. Dancers and flag bearers and musicians, walking two by two, snaked into the stadium.

The Lincoln Lions had arrived, complete.

Lincoln is the oldest of the country’s more than 100 historically black colleges and universities, or H.B.C.U.’s. The schools are renowned for their educational opportunities, and many are famous for fall Saturdays that combine football with high-energy, high-stepping marching bands.

After 154 years and 15,000 graduates, including Thurgood Marshall and Langston Hughes, Lincoln feels whole. It has resurrected a football program that last played in 1960. And it has created its first marching band — and a fight song for it to play.

“Since we were the first H.B.C.U., I would have thought we’d have a football team and a band,” said the Lincoln junior Shanelle Robinson, who transferred from Virginia State to be part of the band’s flag corps. “I guess that’s what was missing from Lincoln University.”

The combination has electrified Lincoln’s sleepy hilltop campus in southeastern Pennsylvania, where the red-brick buildings creep down toward the surrounding farmland. On one edge of campus, a football field will be built, so the team will no longer have to practice on the baseball field and play its games at a high school six miles away.

Alumni have reconnected to their university like never before. Hundreds, including several football players from the pre-1960 era, helped cram the Avon Grove High School bleachers for the first game on Aug. 30, a happy 34-7 romp over a club team from George Mason. Students past and present have scooped up Lincoln souvenirs at the university’s bookstore.

“The first game, my lines were wrapped around the store two times,” the store manager Tanya Bynum said last Friday, when she sold out of Lincoln-logoed umbrellas during a rainstorm. “I can’t keep enough merchandise in the store.”

Despite Lincoln’s success in many of its other 16 sports — including a track team that has won 17 national championships — the university’s 2,450 students have a reputation for shrugging aside its teams and heading home on weekends. But now they talk football in the cafeteria and lean out dormitory windows to watch the band practice. They fill buses that shuttle them to the Saturday football games, because there is no place they would rather go.

“Before, you didn’t really think you had a void,” said the senior Milan Carter, the president of the Student Government Association. “Now that we have a team, you wonder what we did without it.”

Lincoln began playing football in 1894 and was a founding member of the historically black Central Intercollegiate Athletic Association in 1912. But Lincoln stopped playing football after 1960, after a string of losing seasons, increasing disinterest, falling enrollment and competition for African-American athletes from newly integrated universities around the country. And Lincoln never had a marching band.

“When I travel, a lot of people say, ‘Where’s Lincoln?’ ” the senior volleyball player Jordean Matthews said. “I say that we’re the first H.B.C.U. But a lot of H.B.C.U.’s don’t even know where we are.”

She smiled. “But that’s changing.”

The decision to resurrect football and start a band was complex. Each will cost hundreds of thousands of dollars a year to operate, and there are no delusions that football can be profitable. But Lincoln officials see benefits, tangible and intangible, that far outweigh the costs.

The university wants to reconnect competitively and culturally with the H.B.C.U.’s that followed Lincoln after its founding in 1854 as Ashmun Institute. (The name changed in 1866 to honor Abraham Lincoln.) In the increasingly competitive environment of higher education, sports can forge impressions and draw unparalleled attention. Among black colleges and universities, nothing gets noticed like football and the band.

The university president, Ivory V. Nelson, sat in his stately office last Friday and whittled it down by playfully answering a reporter’s question with one of his own.

“You’re sitting here because of what?” he asked, knowing the answer had to do with a football game.

“I couldn’t have called you and got you down here if I had 10 Nobel Prize winners.”

He laughed and acknowledged that 10 would bring plenty of news media queries. But the point was clear.

Lincoln also wanted to increase its male enrollment and retention, as women account for 62 percent of the student population and earn roughly two of every three degrees. And it wanted elevate its athletic programs from N.C.A.A. Division III to Division II, largely so it could rejoin the C.I.A.A., the historically black conference it co-founded nearly 100 years ago.

To do that, Lincoln needed football. And football needed a band.

“Everyone knows, especially in black college football, that the presence of the marching band has as much drawing power, and in some cases more drawing power, than the presence of the football team,” Nelson said. “So we put those two together.”

In the visiting bleachers on Saturday, Edward McLean, the athletic director from Fayetteville State in North Carolina, said football and bands went together “like peanut butter and jelly” at H.B.C.U.’s.

On Aug. 27, 2007, the day that O. J. Abanishe arrived as the football coach at Lincoln, a truck arrived from St. Peter’s College in New Jersey. Inside were helmets, shoulder pads, tackling dummies, game clocks, sideline headsets and more, provided for a steep discount because St. Peter’s had disbanded its program.

“It was like a complete football program starter kit,” Abanishe said.

It did not include any players. Abanishe plucked a handful from an on-campus tryout that attracted 120 hopefuls.

Most of the 55 players on the current roster, sharing 12 scholarships, were outsiders sold on the pitch that they could be part of Lincoln lore.

“We’re part of history,” said Max Holiday, a junior defensive tackle. “We’re going to be here forever.”

H. Wade Johnson, a former band director at three other H.B.C.U.’s, was hired to create the Orange Crush Roaring Lions Marching Band. He designed uniforms, purchased 100 instruments and recruited members to a band that has 50 members and plans for 128. He also wrote a fight song; Lincoln did not have one.

Saturday was a warm day topped with fluffy white clouds. Fayetteville State, a potential rival as Lincoln makes the transition into the C.I.A.A., brought one of the conference’s top teams and its 75-member band. The day displayed how far Lincoln had come, and how far it had to go.

Fayetteville State led Lincoln by 35-0 after one quarter and coasted to a 63-0 victory. Afterward, dejected Lincoln players stood in front of the band as it played the alma mater — a song recently arranged by Johnson for the band; it was usually performed as a choral piece.

Fans left, seemingly unbothered by the result. Lincoln athletes from other sports collected trash from the bleachers. And the players shuffled back to the equipment shed and sat quietly.

Their meditation was broken as Fayetteville State’s band triumphantly marched past to the boom-boom-boom of its drums and the siren of its horns. Back in the parking lot, Lincoln’s band ended the day where it started — working on a whole new beat of its own.

NEW POST-9/11 DRIVER’S LICENSE

NEW POST-9/11 DRIVER’S LICENSE

AP

September 16, 2008 —

Beginning this week, New York drivers will have the option of buying an enhanced driver’s license with an identifying computer chip to comply with post-911 stricter travel requirements.

The new licenses will cost around $80, about $30 more than a regular driver’s license. They can be used instead of a passport at US land and sea border crossings between Canada, Mexico, Bermuda and the Caribbean, but not for air travel.

Officials will talk about the new licenses at the international Peace Bridge in Buffalo today.

Yanks beaned taxpayers, stadium report says

BY KENNETH LOVETT
DAILY NEWS ALBANY BUREAU CHIEF

Tuesday, September 16th 2008, 4:37 AM

Bonifacio/News

An aerial view of the new Yankee Stadium.

ALBANY -The new Yankee stadium got up to $850 million in taxpayer investments but will create just 15 permanent jobs, a scathing new report charges.

Assemblyman Richard Brodsky (D-Westchester) will release the 30-page “House That You Built” report today; it comes as the team finishes its final home stand at its old historic ballpark.

The report says the Yanks got $336 million from the city and state and up to $500 million in interest savings on IRS-approved tax-exempt bonds.

It slams the city Industrial Development Agency, saying it “may have violated existing law in its creation of massive amounts of public debt and its failure to assure public benefits from the massive taxpayer investment.”

The Daily News first reported many of the findings in the report, which charges:

- The city “manipulated” the assessed value of the stadium to meet the need for an IRS tax exemption. The city appraised the value of the new stadium land at $21 million, but told the IRS it was worth $204 million.

- “Sworn commitments” to the IRS and the National Park Service were not kept.

- The Industrial Development Agency and the mayor’s office “secretly” acquired a luxury suite.

- The city failed to protect fans from “excessive ticket price increases.”

Yankees spokeswoman Alice McGillion slammed Brodsky – who heads the Assembly’s Corporations, Authorities and Commissions Committee – as a lying attention-grubber.

“Assemblyman Brodsky has never let an accurate fact stand in the way of his grandstanding in a press release or press conference,” she said.

“The new stadium will create approximately 1,000 additional union jobs than exist in the present stadium, not the 15 he states,” she said.

“This is in addition to the 5,000 union construction workers” working on the project, she said.

Andrew Brent, a mayoral spokesman, was also critical of Brodsky.

“One would think that, in these difficult economic times, the last thing [he] would want to do is trash billion-dollar private investments that he supported before opposing,” Brent said.

McGillion noted that Brodsky voted for “cash bailouts” for the New York Racing Association and okayed tax incentives for Monticello Raceway.

“His hypocrisy is evident,” she said.

klovett@nydailynews.com