Topic: The AIG Debacle

The bailout of AIG in 2008 by the Federal Reserve has been the largest government bailout of a private company in U.S. history. We study the reasons for this collapse and use this bailout as an example to explain some complex financial instruments at the center of this crisis: the credit default swap (CDS) and the collateralized debt obligation (CDO).

The AIG Financial Products division had entered into credit default swaps to insure $441 billion worth of securities originally rated AAA. Of those securities, $57.8 billion were structured debt securities backed by subprime loans which declined in value. As a result, AIG’s credit rating was downgraded and it was required to post additional collateral with its trading counter-parties, leading to a liquidity crisis that began on September 16, 2008 and essentially bankrupted all of AIG.

In addition AIG also faced problems with its US securities lending program as it invested the collateral which it received in subprime mortgage backed securities. As borrowers began returning the securities they had borrowed and demanding repayment of collateral, AIG found it could not sell the mortgage‐backed securities in which it had invested the cash collateral. 

Speakers:

Professor Philippe Henrotte

An Affiliate Professor in finance at HEC Paris, Professor Philippe Henrotte is a graduate from Ecole Polytechnique Paris. He holds a DEA in Finance (advanced degree) from Paris-Dauphine University and a PhD in Finance from Stanford University, Graduate School of Business. His research interests focus on hedging and pricing of derivatives.

Professor Henrotte found and manage Russian Opportunities Fund Ltd in 1998, an open ended fund which targets the emerging markets of the CIS. Since 1999 he is founder and managing director of ITO 33, a company which produces sophisticated derivatives pricing and hedging software for banks and fund management companies. Professor Henrotte has previously also worked for Banque Rothschild etCie, Transoptions Finance, BanqueUnigestion, Banque Indosuez and Barclays Bank. From 2003 to 2008 he served as director and chief financial officer of ZAO Eurotek, an independent gas producer operating in Russia.

Alumni:

Xie Lizhi – Board Secretary of Red Dragonfly   

(Alumnus of HEC Paris MSc and HEC EMBA)

Besides intensive global capital market experience at various institutional investors in Shanghai, Paris and New York,  Mr. Xie spent the last few years of his career in corporate functions focusing on strategy, M&A, private equity and financial management. 

Mr. Xie is now the Board Secretary of Red Dragonfly, a Chinese footwear company that he recently brought public in Shanghai A-share market.

This session is free of charge and will be delivered in English. You are welcome to bring guests.

Entry Requirements:
Entrepreneurs and executive management with more than 8 years work experience (need organizer final confirmation)

To attend the Master Class:
Please email your name, company, title and mobile phone to: nancywang@cciparis.net 
Telephone：021-64373150, 135 6448 2515
Contact：Nancy WANG