Put a Cataloger in Charge of Wall Street!

The New York state superintendent of insurance, Eric Dinallo, told the firm he could allow the parent company to get access to about $20 billion from its subsidiaries; state regulators have oversight over how insurers use assets set aside for potential claims. Mr. Willumstad rushed to tell the executives and bankers: "We found $20 billion!" He left thinking AIG now only needed another $20 billion to avoid disaster. ...

On Sunday morning, AIG's advisers made a worrying discovery. One of the insurer's regulated subsidiaries, its securities lending business, needed a separate injection of as much as $20 billion.

That day, J. C. Flowers made a proposal that would involve an investment of about $10 billion contingent on a number of factors, including ensuring AIG's credit rating wouldn't fall below a certain level. KKR and private-equity firm TPG offered $20 billion for 50% of the company. Both deals were contingent upon some sort of credit line being provided -- either by the Fed or Wall Street banks.

AIG executives wouldn't accept such conditions. But the point was moot. The private-equity firms did their calculations based on the presumption that AIG would need $40 billion. By late Sunday, after Asian markets opened and the value of its assets came under further stress, it was becoming clear the company now needed more than $60 billion.

Mr. Willumstad's outside advisers told Mr. Geithner that the size of AIG's shortfall was "$60 billion plus." They added that they didn't know what the "plus" was. ...

On Monday, AIG informed Mr. Dinallo that it needed as much as $70 billion to avoid failing. Mr. Dinallo replied that the state wouldn't act unless there was a plan in place to provide the rest of what AIG needed. "I can't risk hurting the policyholders if your company goes bankrupt," he said.

Representatives from J.P. Morgan and Goldman Sachs met all day Monday at the Fed's office in Lower Manhattan. Together with Morgan Stanley, they evaluated AIG's liquidity needs and, separately, the viability of a private-sector solution. Their updated conclusion: AIG needed about $80 billion.

The lead of paragraphs of this story are at right under "IN THE NEWS."

Violated? A director felt violated? How about the stockholders whose shares were worth $2.25--down from $58.30 at the beginning of the year? Talk about being violated by absolutely incompetent nincompoops!

Willumstad's salary was $1 million a year plus a minimum bonus for 2008 of  $4 million.  And the jerk didn't know the difference between $20 billion and $80 billion!