You know how you keep hearing that AIG is a healthy insurance business attached to a hedge fund called “financial products?” That’s just not true. It wasn’t just one division that sent AIG into the tank. Lots of AIG businesses were bad.
You already know about the securities lending business, which wasn’t run out of the Financial Products office in Wilton, Connecticut. But did you know that the aeroplane leasing business is broke too? That’s right. AIG has a business that leases jets, and now it needs a bailout also.
The problem with the jet leasing business is simple: its operations are inadequate to meet debt obligations for 2009. In short, it’s insolvent. Right now it is being propped up by the parent corporation, which is being propped up by the taxapyers.
AIG wants to sell the business but, shockingly, is having trouble finding buyers. Because of credit downgrades, the unit lost access to the Fed’s subsidized commercial paper program because of credit rating downgrades. Now executives are saying that the government will have to provide financing to a buyer, and according to Bloomberg the government has already agreed to this.