AIG is becoming a recidivist petitioner for government largesse. First it was $85 billion, then another $38 billion, and now the giant insurer also wants access to the Fed’s commercial paper facility.
From Bloomberg (hat tip reader Steve):
American International Group, the insurer that agreed to a government takeover in exchange for a federal loan, may try to borrow more through a U.S. program that buys commercial paper, according to a person familiar with the situation.
AIG would probably tap less than $10 billion through the new commercial paper program, said the person, who declined to be identified because no agreement had been reached. AIG, once the world’s largest insurer, may seek the additional funding after the Federal Reserve expanded its $85 billion lifeline to the company last week by making another $37.8 billion available.
Chief Executive Officer Edward Liddy is selling units including U.S. life insurance, plane leasing and consumer finance to repay the government loan. New York-based AIG has already tapped two-thirds of the $122.8 billion made available through the two credit lines.
“We’ve got a plan that will allow us to repay the Fed loan and emerge as a strong international property-casualty insurer with a presence in international life insurance,” said AIG spokesman Nicholas Ashooh.
The Fed said last week it will create a special fund to buy commercial paper, seeking to unblock the financing that drives everyday commerce for American businesses. A spokesman for the New York Fed declined to comment on individual companies that may seek cash through the fund.
Only these days would “less than $10 billion” be seen as a modest request.