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AIG
Previously, I wrote about the Fortune 500 companies whose stocks performed well last year. If you want to see returns on your stock investments, look into dollar stores, food wholesalers and other types of discount retail. However, this article is about which companies lost the most money last year.
Fortune 500 compiled a list of companies that lost the most money in 2008. Here are the top five.
1. American International Group
AIG has been all over the news, and for good reason. Besides taking multiple government bailouts and then handing out bonuses to company executives, AIG lost more money than any other Fortune 500 company. The gargantuan insurance company lost nearly $100 billion in 2008. Fortune Magazine says:
The New York-based insurance company that spawned an out-of-control London derivatives dealership is now a $170 billion (and counting) headache for the American taxpayer.
Most of AIG’s losses were due to contracts created to pay off holders of mortgage-backed securities if the personal loans that backed them defaulted. Lesson learned? I hope. This company is going to need some serious credit repair.
2. Fannie Mae
This partially government-owned entity bought or guaranteed approximately 20 million personal loan mortgages with money it borrowed at very low rates. According to Fortune:
As the delinquency rate on the single-family home loans it guarantees more than doubled last year, the company was taken over by Treasury, which is now using it to absorb an endless stream of housing market losses. Last year Fannie lost a staggering $30 billion on its mortgage guarantees alone.
Long story short, Fannie Mae lost $58.7 billion in 2008. Not surprisingly, its brother company is next on the list.
3. Freddie Mac
Though Freddie Mac is considerably smaller than Fannie Mae, it came close to losing the same amount of money, with more than $50 billion. Freddie jumped on the bad-loan-backed security band wagon and suffered $16 billion in realized and unrealized losses.
Freddie borrowed $14 billion from the government, and it has asked for another $31 billion.
4. General Motors
It should come as no surprise that GM is fourth on this list of big-time money losers in 2008. Rumors have been flying that this automaker will soon file bankruptcy. GM lost about $31 billion in 2008. It has gotten government bailouts as well, to the tune of $13.4 billion.
GM is struggling to fight an 11 percent drop in sales. It has released several new fuel-efficient and hybrid cars to try to increase profits.
5. Citigroup
Rounding out the top five Fortune 500 companies that lost the most money in 2008 is Citigroup, parent company to Citibank. The huge financial conglomerate lost $27.7 billion. Citigroup lost money in every quarter in 2008. Subprime mortgages cost the group $14 billion.
The government now holds a 36 percent stake in the company, and Citigroup surprised everyone when it turned things around in the first quarter of 2009. It pulled in a profit for the first time in more than a year, mostly because of its investment banking division.
