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Pressure on American International Group Inc. shares eased off Monday afternoon, after the State of New York jumped in to help by agreeing to bend the rules so that the insurer could access $20 billion of its own capital. After getting savaged early on, falling 71% to a low of $3.50, the stock recovered some of its losses and was down about 45% to $6.51 in early afternoon trading.
The plan allows AIG to move funds from its insurance subsidiaries to the parent company and will likely stave off a ratings downgrade. AIG had worked with New York officials through the weekend to shore up capital after rating agencies threatened downgrades. New York Gov. David Paterson (pictured) said the state stepped in to help avoid job losses, as AIG employs 6,000 people in Manhattan and 8,600 statewide. He said the plan was designed to pose no risk to New York's taxpayers.
"[This] is not a government bailout,'' Paterson said at a press conference. AIG fell hard on Monday morning, as investors rushed to get out the stock after seeing Lehman Brother Holdings Inc.'s fail and Merrill Lynch & Co. run into a shotgun marriage with Bank of America Corp. over the weekend. AIG rejected its own shotgun marriage in the last few days, as it rebuffed a buyout offer from J.C. Flowers & Co. LLC that would have resulted in the private equity firm taking control from current management. Instead the insurer went to the Federal government hat in hand in hopes of getting a $40 billion bridge loan from the Federal Reserve. - George White See Reuters story See Dealscape post on AIG See story on investment banking collapse on TheDeal.com See story on Merrill Lynch on TheDeal.com Categories![]()
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