AIG taps Fed for a further $38bn loan
by Gill Montia
Story link: AIG taps Fed for a further $38bn loan
American International Group (AIG) is negotiating a further bail out from the Federal Reserve.
In mid-September, the troubled US insurer was rescued from the brink of collapse by an $85 billion loan facility from the central bank, when it became clear that failure of the group could cause serious damage to global financial markets and world economies.
AIG has now returned to the Federal Reserve with a request for a further $37.8 billion (£21.6 billion).
The new injection of cash will be backed by investment-grade bonds held by the group.
The US Government already owns 79.9% of the business and it is not yet known whether this stake will be increased.
AIG is currently selling assets worldwide to pay off its debts and says it will restructure itself around its core property and casualty insurance businesses.
Earlier this week, the group announced the sale of three of its Japanese life insurance units; it is also likely to dispose of its aircraft leasing unit, US consumer lending unit and life insurance and pension operations in the US, Europe and Latin America.