In case you weren’t keeping tabs (the number and variety of handout-recipients grows with every passing day), AIG was first given a loan (really, akin to a maximum borrowing authorization) of $85 billion with much fanfare and high drama, which was later quietly increased by another $37.8 billion. In the last ten days, AIG has said it intended to borrow perhaps as much as $10 billion through a separate, new commercial paper program.
Bloomberg indicates that AIG is now saying that it might need even more dough, although its latest plea does not have a figure attached to it. From Bloomberg:
American International Group Inc. has used $90.3 billion of a U.S. government credit line since it was bailed out last month, an amount that exceeds the size of the original loan meant to save the insurer.
AIG may need more than the $122.8 billion now available to the New York-based insurer, Chief Executive Officer Edward Liddy said Oct. 22. The company, which agreed Sept. 16 to turn over majority control to the U.S. in exchange for an $85 billion loan, got access to an additional $37.8 billion this month. AIG’s latest balance was revealed yesterday by the New York Federal Reserve, and is up from $82.9 billion a week ago.
“This emphasizes the uncertainty for anyone trying to put a number” on AIG’s cash needs, said Bill Bergman, an analyst at Morningstar Inc. in Chicago. The financial-products unit that caused most of the firm’s losses “is a big black hole.”….
“To the extent they continue to go down and we have to keep posting collateral, as it’s called in the vernacular of the industry, it’s possible it may not be enough,” Liddy said.
Liddy said in the interview that he thinks AIG “should be OK,” that he still hopes to stay within the $122.8 billion ceiling and that Treasury efforts to spur lending “seem to be working.” A spokesman for the New York Fed declined to comment. Brookly McLaughlin, spokeswoman for the Treasury, didn’t return a call seeking comment.
“The money is to meet our cash needs while we work out the rest of our solution, it’s not the total solution,” said AIG spokesman Nicholas Ashooh. “We still have to sell businesses and still need a permanent solution to the liquidity drain” from securities lending and the fixed-income guarantees known as credit-default swaps….
The insurer may seek a third source of cash by tapping a Fed program that buys commercial paper, a person familiar with the matter said last week. AIG will probably borrow less than $10 billion through the program, which is scheduled to start next week, the person said.