A.I.G. Seeks $40 Billion Bridge Loan from Federal Reserve Aid to Survive

September 15, 2008 by · Leave a Comment
Filed under: Industry News 

After this 500+ point Dow Jones Index massacre we are seeing another potential collapse in the making.  AIG is now seeking a bridge-loan from The Fed to keep it afloat.  AIG is worried that a ratings downgrade could spell disaster for the insurance firm.  Paulson has already made statements to the affect of a “no more bailout” policy from the US Treasury.  There are even rumors that JPMorgan and Goldman Sachs could need a capital infusion soon as well but I have not read anything solid enough to substantiate that claim at this point.

AIG Article:

The American International Group (AIG) is seeking a $40 billion bridge loan from the Federal Reserve, as it faces a potential downgrade from credit ratings agencies that could spell its doom, a person briefed on the matter said Sunday night.

Ratings agencies threatened to downgrade the insurance giant’s credit rating by Monday morning, allowing counterparties to withdraw capital from their contracts with the company. One person close to the firm said that if such an event occurred, A.I.G. may survive for only 48 hours to 72 hours.

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AIG plans $20 billion asset sell-off to shore up capital

September 14, 2008 by · Leave a Comment
Filed under: Industry News 

The most interesting piece of this article was the mention at the bottom that stated AIG has lost $18 billion in the last 3 quarters from the next boot to drop, credit-default swaps or CDS.

This is just another sign that the unregulated credit-default swap market is the real lurking dragon on the market and all of these aggressive actions to keep companies from going bust with a lot of these CDS on their balance sheet making them go default and then you would have a situation where many of these CDS dealers could not have the capital to pay the counter-party.

Article:

American International Group (AIG), the world’s biggest insurer, is planning a $20 billion asset sell-off as it fights to correct a slump in its shares and braces for the impact of Hurricane Ike, the Sunday Times said.  The newspaper, without citing sources, said details of the plan could come as early as Monday.

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