Some details of the latest AIG bailout have emerged:
- We’re throwing another $30 billion into the black hole
- AIG is abandoning its plan to pay us back and is instead giving us equity stakes in two businesses it has been unable to sell. No details yet on the imputed value placed on those unsaleable businesses, but safe to assume its astronomical. (Our government being the sucker of last resort).
If a comet smashes into the earth tonight, there will at least be one positive side effect: The end of AIG.
(Who’s that a picture of? That’s Joseph Cassano. He used to run AIG’s financial products business. He’s the one who got paid hundreds of millions of dollars for writing the credit default swaps that have swallowed $150 billion of our money and counting).
WSJ: American International Group Inc. will receive up to an additional $30 billion in federal assistance as part of the latest revamp of its government bailout, according to people familiar with the matter.
The new funding is intended to support AIG as it absorbs $60 billion in quarterly losses and operational and competitive upheaval. Under the plan, the insurer will repay much of the $40 billion it owes the Federal Reserve loan with equity stakes in two AIG units overseas — Asia-based American International Assurance Co. and American Life Insurance Co, which operates in 50 countries.
Repayment was originally supposed to be in cash with interest. In addition, AIG will securitize $5-$10 billion in debt, backed with life insurance assets, to further reduce its debt burden.
Following these moves, the $60 billion Federal Reserve credit facility AIG received in November will be reduced to $25 billion. AIG has already drawn down $40 billion of those funds.
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