In The News: AIG Wants More
January 23rd, 2009. Published under UrbanSpeaker. No Comments.
After the American government recently “loaned” AIG $85 billion USD, the executives took a lavish trip to a California spa and awarded each other huge bonuses. Now the company continues to flounder, losing $15.8 billion in the past four quarters, and wants more money.
CNN Money writes:
The New York Federal Reserve is lending up to $37.8 billion to American International Group to give the troubled insurer access to much-needed cash.
In exchange, AIG is giving the New York Fed investment-grade, fixed-income securities that it had previously lent out to other institutions for a fee. Those institutions are now returning these securities and want their money back.
The new program, announced Wednesday, is on top of the $85 billion the federal government agreed to lend to AIG last month to prevent the global company from collapsing. AIG said last Friday it had drawn down $61 billion.
The lending program is a way for AIG to get funding for its businesses, said a New York Fed spokesman. The system is similar to lending facilities the Fed provides to banks, which can also exchange collateral for cash.
Should the government be continuing to throw good money after bad or will this latest measure actually rescue the company from destruction.
