AIG uses 75% of Fed bailout loan

The struggling insurance giant American International Group has already used up three-quarters of a $ 123 bn government rescue loan, reported the Washington Post, today.     

Just over a month after the US government stepped in to save AIG from collapse, the newspaper cited sources close to the arrangement as saying it had drawn down significant amounts of two separate interventions.     

"AIG has borrowed $ 90.3 bn from the federal reserve's credit line as of Thursday, the bulk of it to pay off bad bets the company made in guaranteeing other firms' risky mortgage investments," the newspaper said.     

"AIG has tapped $ 72 bn from the original $ 85 bn bailout," the report said.     

 

"It has drawn down $ 18 billion of the additional $ 38 billion the fed offered in credit liquidity for losses the company was suffering in securities lending."     

Far more than other insurers, AIG has been a big player in a complex market called credit default swaps , financial instruments in which Wall Street companies take out a form of insurance against the risks of bond defaults.     

These products, often linked to the US real estate market, are at the heart of the current banking crisis and have exposed AIG to massive losses.     

The US Federal Reserve agreed in mid-September to the loan of $ 85 bn to stave off the collapse of AIG.     

The deal gave the US government a 79.9 % stake in the insurance behemoth, which it considered too big too fail.