AIG Needs $38 Billion More
We just loaned them $85 Billion. But that wasn’t enough.
Everyone. Together now. “I told you so!”
The Federal Reserve announced Wednesday it was lending billions of additional funds to cash-strapped American International Group Inc.
Under the program, the New York Federal Reserve Bank will provide $37.8 billion in additional cash to certain domestic life insurance subsidiaries of AIG in return for investment-grade, fixed-income securities.
AIG already has an $85 billion line of credit with the Fed. As of last week, AIG had used $60 billion of this loan, according to Fed data.
This new program will allow AIG to replenish liquidity, the Fed said. At the same time, the securities will provide enhanced protection to U.S. taxpayers, the central bank said.
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Filed under: Economy, politics, subprime
The $85 billion rescue cash given to AIG was a necessary evil to keep the world’s largest insurer of both corporate and domestic risk afloat. Using a portion of that money to hold a junket in which AIG tried to convince investors of upward looking future prospects isn’t unreasonable. In fact, it would be irresponsible not to hold some type of celebration to assure the market of a bright future. This is especially true when we consider that $440,000 is .000518 percent of $85 billion. Not doing this would be like recieving debt relief on your defaulted home loan and not telling your family because you feared wasting cell phone minutes or not sending the notification to your bank because of the cost of a priority stamp.