Friday, October 03, 2008
That was quick
A staple of male comedians for years has been jokes about how much money their wives could spend, but I doubt any of them knew anybody who could spend money like this.
The American International Group said on Friday that it had already drawn down $61 billion of the $85 billion emergency bridge loan it received from the Federal Reserve two weeks ago, an announcement that startled credit ratings agencies.The clock is now ticking, AIG has two years to repay their generous Uncle Sam. But not to worry.
The emergency loan was supposed to buy the company time to sell its troubled assets in an orderly manner. But the sell-off has not yet begun, and now the insurer faces the additional pressure of trying to sell the businesses at a time when potential buyers are having trouble borrowing money.
In response to questions, Mr. Liddy said it was impossible to say exactly how much money A.I.G. would have to raise to pay back the Fed and emerge from its crisis as a smaller company with adequate capital.Just a quick double dip should do the trick.
“It’s kind of a Rubik’s Cube,” he said. “We need to be very flexible” because of the fluid economic environment.
He said that in addition to using the $85 billion Fed loan, A.I.G. would be able to participate in the $700 billion bailout program signed into law by President Bush on Friday. The additional help from the Treasury might ease some of its financial burdens, Mr. Liddy said.
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