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A.I.G. Secures $150 Billion Assistance Package
Key Excerpts from Article on Website of New York Times
Posted: November 14th, 2008
http://www.nytimes.com/2008/11/11/business/11insure.html?par...
The American International Group said on Monday that it ... had secured a new $150 billion government assistance package intended to stem the bleeding from its complex financial contracts. A central component of the new package will be to get the most tainted assets out of the company, in an effort to stop the collateral calls that have been rapidly draining A.I.G.s cash. A.I.G.s trading partners in these financial contracts will largely be made whole in the process. [An] important feature will be government investments of about $50 billion to create special-purpose entities to relieve the company of its most tainted assets. About $30 billion of the government money will be used to buy complex debt securities that were insured by A.I.G. and about $20 billion more will be used to buy securities backed by home loans. A.I.G.s counterparties financial institutions in the United States and Europe have not borne significant losses on the financial contracts that led A.I.G. to the brink, and the new program suggests they will not. Were funding somebody on the other side of A.I.G.s derivatives contracts, said Lynn E. Turner, a former chief accountant with the Securities and Exchange Commission. Neither A.I.G. nor the federal government has been willing to provide the names of the companys biggest counterparties, or their amount of exposure. Weve had way too many things here that nobody knows anything about, said Mr. Turner, who is on the Treasurys Advisory Committee on the Auditing Profession. Thats why no one has faith in the capital markets.
Note: The culture of secrecy around this bailout using nearly $1 trillion of taxpayer money is appalling. For many revealing and reliable reports on the Wall Street bailout, click here.
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