UPDATE: Former AIG boss Hank Greenberg hits CNBC to beg for a Fed bridge loan. He says the company’s subsidiaries are healthy (they are) and that AIG is not insolvent. Without a bridge loan, however, he says the company is toast. For some reason, the market liked his comments. Full transcript of Hank Greenberg’s remarks here.
EARLIER: The rating agencies finally downgraded AIG last night, which means the company immediately has to come up with $14.5 billion of capital it doesn’t have.
The government is trying to broker an astoundingly large loan facility of $70-$75 billion from Goldman and JP Morgan to keep the firm solvent, but this seems a Hail Mary: Goldman and Morgan don’t have that kind of money, either. The stock is now down to $2 in the pre-market.
The consensus is that an AIG bankruptcy would be far worse for the markets than the failure of Lehman. We’re sceptical–so far Lehman’s failure has been much easier on the markets than people expected–but AIG is a hell of a lot bigger. Thus, Paulson and Bernanke have another tough decision to make. Here’s hoping they hold fast.
Check back for the latest updates on AIG. We’ll be updating this post all day.
Business Insider Emails & Alerts
Site highlights each day to your inbox.