AIG: The Never-Ending Bailout

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.

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11 comments

  1. S

    This has CDS money laundering all over it. JPM can;t be the onlyu conduit. PAulson now has four super Sivs: JPM, GS, GSEs and now AIG.

    Across the curve has a rumor that JPM is pumping money into the interbank market via the Fed.

    The entire market is a farce.

  2. Anonymous

    Hmm. Perhaps it would be just easier if we would let AIG in charge of running the printing press.

    I also recommend passing an executive order to make it official that all ordinary Americans are now indentured to their banking system.

  3. Anonymous

    I also recommend passing an executive order to make it official that all ordinary Americans are now indentured to their banking system.

    You’re 95 years late with that proposal. The Federal Reserve Act and the 16th Amendment already implemented that in 1913.

  4. FairEconomist

    We’re going to see a lot of this with bailouts of these companies with opaque cooked books (which is almost all of them). The first bailout won’t cover everything because so much is unknown. A nationalized Lehman would have come with a nasty 100 billion surprise too. I expect you’ll see more begging from UBS and from the banks the Brits nationalized as well, probably in just a few weeks. Fannie and Freddie will be next year after the elections. This will be a chronic problem given that all the Western nations have committed to unlimited blind bailouts.

  5. dba

    In exchange for Fed loans, AIG should be required to divulge information on all DBA premiums and claims paid and denied to date. What is DBA? Workers comp for contractors working in Iraq. DBA is 100% reimbursable. When the GAO tried to get data from insurance companies back in 2005, they refused to provide it.

    Seems like taxpayers should get something out of the deal.

  6. Anonymous

    From the Fed’s FAQ

    How will the Federal Reserve report lending under the CPFF?

    The Federal Reserve will not publicly disclose the individual issuers or the amounts provided to individual issuers by the CPFF. Balance sheet items related to the SPV and CPFF will be reported on the H.4.1 weekly statistical release titled “Factors Affecting Reserve Balances of Depository Institutions and Condition Statement of Federal Reserve Banks.” There will be an explanatory cover note on the release when the items are added.

  7. Anonymous

    On Monday, September 15th the world awoke to the news of AIG’s emergency $40 billion loan from the United States Federal Reserve, Bank of America’s $38 billion offer to buy Merrill Lynch and Lehman Brothers’ Chapter 11 bankruptcy filing. As the day went on the Dow Jones industrial average fell by over 500 points as the New York Stock Exchange responded to the weekend’s events.

    Amidst the financial chaos, however, a strong financial brand was scoring success with a C-level event for some of the most influential figures in the community: the world’s largest and most diverse derivatives exchange, CME Group , was hosting its inaugural Global Financial Leadership Conference at the Ritz Carlton Golf Resort in Naples, Florida—its most important gathering since its merger of CME, CBOT and NYMEX.

    This conference meant business, a fact that was underscored by the keynote speakers: Tony Blair, former Prime Minister of Great Britain, and Paul Volcker, former chairman of the Federal Reserve. The conference was also the first time CME Group publicly presented itself as a unified and rebranded organization. This made it all the more important that the conference be a huge success in the eyes of the CME Group leadership and more importantly, their audience.

  8. Anonymous

    One hundred and twenty two thousand million dollars !!!!!!!

    What would have happened if AIG was forced into BK?

    Criminal. Totally criminal.

  9. Richard Kline

    Given the extreme conditions in the financial system of the last month, blanket statements all but certainly had to be made. What needs to happen now takes sharp pencils and titanium backbones, seizing and closing down busted shops, and generally telling the bit players in private what they are expected to do and not to do for the nonce. Paulson won’t, that’s the ruby. With the three months he has left, he will sign on the dotted ling as the Secretary of Catastrophe committments for many hundreds of billions of dollars to his buddies and peers. Presently, the banks are really calling all the shots: these tar baby buy-ins are all driven by what the banks want, not what the public needs. It’s a comprehensive looting of the public funding authority at the rate Paulson is going, with no real control by the public authorities. But Paulson is writing promissories with his mouth which Uncle Sam’s wallet can’t cash . . . .

  10. Dan W

    Lessons from Gandhi…and Billy Ray Valentine (Capricorn)
    Dear Fellow Victims:

    Together, daily, we share news of the latest in the greatest financial ripoff in the history of history. Billions—literally—of human beings left to suffer and freeze and starve over the next 5-10 years, as the Plutocrats and Kleptocrats hunker down with their riches, their mansions, their Lamborghinis, etc.

    Well, I take my lessons from 2 sources: Mohandas K. Gandhi and Billy Ray Valentine. Gandhi you know, I hope. Valentine, played gracefully by a young Ediie Murphy, was the guy in TRADING PLACES who goes from being poor to rich, at the expense of Winthorp, played gracefully by a skinny Dan Aykroyd. ANYWAY….

    So, here’s the point:

    1. Gandhi organizes a day of “fasting and prayer” to protest British rules in India. Of course, a day of fasting and prayer also means 500 million Indian workers off the job: no trains, no buses, no public works—which effectively leaves 100,000 British ex-pats in India totally cut off from the world. A bad day for the Brits, to say the least.
    2. Billy Ray Valentine (Capricorn) points out to Lewis Winthorp–as Winthorp cleans out his shotgun barrel in preparation, one can only assume, for a knee-cap shattering meeting with The Dukes brothers (Randolph and Mortimer Duke, of Duke and Duke Commodities, INC.)—that the way you really get a rich person back is NOT by shooting him, but instead by making him poor.

    OK, you with me so far?

    Now for the union of Gandhi and Valentine.

    It seems to me that the real criminals in all of this are the bankers, the folks in the financial industry, the Paulsons and Bernankes and Fulds and all of the folks who have become wealthy on the backs—and on the debt—of the rest of us. This system of FRACTIONAL RESERVE BANKING, a system in which money = debt, this system can only function and make millionaires of a few while leaving the rest in the dust if and only if the rest of us choose to play.

    Look, what terrified Paulson more than anything—and then he convinced Bush to be terrified, and he convinced the scumbags in Congress to be terrified—-was the idea of a financial system, whose very existence is dependent upon growth and therefore upon more and more debt, collapsing because the borrowing cycle had been shut down.

    These total assholes admitted it, and they assumed the rest of us wouldn’t really get it. They said, flat out, that we are risking a systemic financial collapse unless we can get the credit markets working again.

    Look, I want you to PLEASE watch this video RIGHT NOW. Afterwards, come back to my post.

    http://video.google.com/videoplay?docid=-9050474362583451279

    OK, now…here comes my thesis…well, not really…ummmm….more like my proposal.

    Let’s stop playing! I say, get together with people in your community and come up with a plan so that (a) everyone can eat and (b) everyone can stay warm and (c) everyone has water to drink and (d) EVERYONE STOPS PAYING FOR THINGS THAT ARE MAKING THE MOTHERFUCKERS RICH!!!

    To hell with paying your mortgage, and certainly to hell with paying taxes! Think about taxes for one second. All of our taxes have to go up, because we have, to this point, lent the FED over a TRILLION dollars—and Scumbag Paulson is giving all of OUR money (money that we have earned through our hard work as teachers, and carpenters, and farmers and police officers, etc.) to the banks so that the credit market will loosen so that the banks will loan us back our money…at interest!!! I say, no more!!!!!!!!!!

    I say we need to come together in our communities and protect each other and help each other and go on strike from giving our hard earned money away so that amoral scum like Henry Paulson can make millions more dollars off of us. I am done with that shit!

    We cannot do this alone. Alone we are pariah who get nicked by the FBI and thrown in jail and called extremists. I say, this needs to be a mass movement. A mainstream movement of protest against a financial system that CAN ONLY SURVIVE on the growing debt burden of the ordinary folk.

    I may not be William Wallace, and while I like Mel Gibson as an actor I find some of his views about religion rather abhorrent…but I will say this: It is time to claim…OUR FREEDOM!!!!!!!!!!!!!!!!!!!!!!!!!

  11. American Goy

    “I also recommend passing an executive order to make it official that all ordinary Americans are now indentured to their banking system.”

    No need.

    Google “de facto”.

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