Turns out one bailout wasn't enough for troubled insurer American International Group Inc.
The Federal Reserve and the U.S. Treasury have now restructured the
government loans extended to the company in September. From the
Treasury, AIG will receive a $40 billion investment from the $700
billion Troubled Asset Relief Program. Meanwhile the Fed will create
two new lending facilities with a total of $52.5 billion to offer in
order to speed up the sale of AIG's mortgage-related assets.
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The lending facilities, set up by the New York Fed, will absorb
losses over the first $6 billion on the sale of AIG's residential
mortgage-backed securities and collateralized debt obligations.
The Fed will also reduce the existing credit line extended to AIG to
$60 billion from $85 billion, and also cut the interest rate it charges
AIG.
Knowing that the restructuring of AIG's bailout is likely to be unpopular, the Federal Reserve attached golden-parachute
limitations and a freeze on the size of the annual bonus pool for the
top 70 company executives to the new package. - George White
See Fed press releaseSee Dealscape post on AIG restructured bailout
