AIG Wants More Money.... Again... [The Black Hole]
Via the TWSJ, Federal officials are considering ways to ease the financial pressure on AIG, including changing the terms of the $85 billion loan.
Now if you remember, AIG was the company that had the $440K "retreat" in California, on the taxpayers dime, was the company that was planning on "business as usual" with spending hundreds of thousands of dollars on conventions, retreats, and even included a hunting party in England. AIG Liddy later said, as probably a result of negative media, and the fact that the NY Attorney General threatened to take AIG to court over such expenses, said AIG would be making an effort to "identify activities that aren't critical and reviewing executive compensation."
Additionally, only a few days after AIG was bailed out, they filed for bankruptcy.
AIG has borrowed $61.3 billion under the original $85 billion loan, and an additional $19.9 billion under a second $37.8 billion program related to its securities-lending business. The terms of the original $85 billion loan call for AIG to pay an interest rate of 8.5% for money it isn't borrowing. It pays a higher rate -- three-month Libor, which is at 2.39%, plus 8.5 percentage points -- for what it actually draws down. People close to the insurer complain that the terms of AIG's loans are onerous compared with the 5% interest charged by the government to banks and other financial institutions under the $700 billion Troubled Asset Relief Program.
And a week ago, AIG said it would be able to access up to an additional $20.9 billion under the new commercial-paper-funding-facility program. In total, the government has put about $144 billion at AIG's disposal.
By using the commercial-paper program from the Feds, AIG has been able to reduce the amount it had borrowed under the original $85 billion line of credit.
AIG officials hope these factors will help persuade the government to change it's loan terms, since the government would have the most to lose as both AIG's creditor and controlling shareholder although AIG has managed to pay back about $2.3 billion of their loan. A week ago the Federal Reserve showed that AIG had loaned AIG $83.5 billion, this week, that number is $81.2 billion.
If you remember, AIG agreed to the government's terms under duress in mid-September, with the expectation that it would be a short-term bridge until AIG could sell assets to meet its obligations. AIG counterparties have demanded billions of dollars in collateral to ensure AIG stands behind its commitments to make payments in the event of defaults. If it were unable to meet those obligations, it would prove a risk to the global economy. This has become a concern for foreign governments, who are pressuring U.S. officials to find a solution.
PERSONAL RANT
AIG took the money, although at the time they state under duress, and now they want to change the terms of the loan because they are having problems paying back the money, that obviously the needed? Does the word NO mean anything to them? AIG has played the Feds more than they will ever know, and the Feds have bitten off more than they can chew. AIG is reminding me of what I call a "bug" that you loan a quarter to because they want a drink at work and are short. Then a few days later, they ask to borrow fifty cents. Then a few days later they ask for a dollar. Then they want to borrow five dollars so they can buy lunch for themselves.....
Seriously, forget it. Fix your business or let it die because if we keep giving AIG handouts, or changing loan terms, we the taxpayers are going to end up paying for it for the next fifty years. Especially since Obama has stated only a day after he won the election, that after the economy stabilizes, our taxes are going up.
PREVIOUS POSTS:
- AIG Liddy Demands Apology from Cramer. [And my personal letter to Liddy.] (10/21)
- AIG Says Goodbye To More Wicked Ways.. [Until They Are Out Of The Spotlight] (10/20)
- Waxman Request Details of AIG Spending & AIG Wants $10 Billion MORE! [An official WTF moment....] (10/17)
- AIG Turns From Wicked Ways, Just Like Paris Hilton... [Yeah Right] (10/17)
- U.S. Representative Paul E. Kanjorski Wants AIG To Reimburse Money (10/16)
- New York Attorney General Cuomo Warns AIG On Spending Taxpayers Dollars. (10/16)
- Wanna Know Why AIG Went Bankrupt? (10/10)
- AIG Cancels Corporate "Convention" in Half Moon Bay and Paulson fires AIG consultant and Other AIG News. (10/10)
- AIG's $440K "retreat" is "normal" and they are having another one. (10/08)
- AIG Execs use $440,000 of taxpayers money to take retreat after bailout. (10/07)
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