AIG borrows $90.3 billion from Federal Reserve

October 24, 2008 by · Leave a Comment
Filed under: Industry News 

Its good to know that AIG can borrow over a tenth of a trillion dollars to shore up it’s balance sheet.  The new CEO is not even sure if $123 billion (amount available from the Fed) will be enough to keep them in business.  AIG’s “financial products” division is what created the current problem they are in.   This division specialized in derivatives along with other exotic financial products.  

I believe with these bank failures and nationalizations that this has triggered much of this corporate debt insurance to become a real liability and now with them people counter-party to this debt, they need to make good or default and that is the problem here that is not being discussed.  .02

Press Piece:


American International Group (AIG).  the insurer saved from bankruptcy by a federal bailout, has borrowed $90.3 billion from the U.S. Federal Reserve.  Figures released by the Fed late on Thursday showed that as of Wednesday, AIG had drawn down $3 billion more than a week earlier.

 AIG has borrowed $72.3 billion, or 85 percent, of an initial $85 billion bridge loan extended by the government on Sept. 16.

In addition, it has drawn $18 billion under a subsequent $37.8 billion securities lending agreement the government agreed to extend earlier this month.

The company is scrambling to sell off parts of its business to repay the bridge loan, which carries hefty interest and fees.  In total, the government has put about $123 billion at AIG’s disposal.

AIG Chief Executive Edward Liddy earlier this week said on a PBS television broadcast said he hoped but was not certain that $123 billion would be enough.

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