AIG going in for more $$$

[compuwiz1]

AIG gets 37.8 B more

Guess that Govt. welfare program was so good the first time they had to go back for seconds. I see a trend happening. And the execs party on. :shocked:

 

[Fern]

FYI - we now know that the execs were not at the party. The party was for independant contractor-type salesmen; I presume the top sellers.

Fern

 

[fskimospy]

I don't really see why everyone is mad about these loans, or what the company is doing with its money. I guess in some ways the company looks foolish for doing this, but the government will 100% get all of its money back. AIG is worth more than a trillion dollars, the only thing that's up in the air is how many of AIG's assets will be sold to cover the loan.

 

[BoberFett]

Selling what to who? I thought the market was illiquid?

 

[fskimospy]

Originally posted by: BoberFett
Selling what to who? I thought the market was illiquid?

That's why the government is loaning them money. The market will not always be this way, and when it isn't the loan will be paid back.

 

[Engineer]

Originally posted by: Fern
FYI - we now know that the execs were not at the party. The party was for independant contractor-type salesmen; I presume the top sellers.

Fern

Did AIG pay for it?

 

[bsobel]

You all do realize that AIG is paying through the nose for these loans "Interest will accrue on the outstanding balance at a rate of three-month Libor plus 850 basis points." Roughly 11%. I wish all of the governments investments returned 11%.

 

[Grunt03]

I wanna know where the line starts cause I need so too.......

 

[fskimospy]

Originally posted by: Grunt03
I wanna know where the line starts cause I need so too.......

You want to take out large loans at 11% interest? I'm sure plenty of local banks are willing to screw you over like that.

 

[bsobel]

Originally posted by: Grunt03
I wanna know where the line starts cause I need so too.......

If you have strong assets Ill loan you money at 11%.
Bill

 

[JS80]

Originally posted by: Engineer

Originally posted by: Fern
FYI - we now know that the execs were not at the party. The party was for independant contractor-type salesmen; I presume the top sellers.

Fern

Did AIG pay for it?

Of course, it's a non-cash commission payment to the top earners. This has nothing to do with AIG's executive screw up - it's a commission for salespeople who tricked people into buying whole life insurance. Top 100 salespeople across the country will win a trip to the spa valued at $4k.

This wasn't a celebratory executive getaway.

 

[First]

I don't see what the problem is when it's a loan they'll have to repay at steep interest. From the article:

On Sept. 16, the Federal Reserve Board agreed to lend AIG $85 billion, using the company's assets as collateral. The loan is expected to be repaid from the proceeds of the asset sales. Interest on the line of credit is steep, and the government took a 79.9% stake in the company.

 

[smack Down]

Originally posted by: Evan Lieb
I don't see what the problem is when it's a loan they'll have to repay at steep interest. From the article:

On Sept. 16, the Federal Reserve Board agreed to lend AIG $85 billion, using the company's assets as collateral. The loan is expected to be repaid from the proceeds of the asset sales. Interest on the line of credit is steep, and the government took a 79.9% stake in the company.

The problem is that they are never going to repay it.

 

[wetech]

The OP's article doesn't do a good job of describing this transaction. In this case, the Fed is actually borrowing bonds from AIG. In return, the Fed has to post cash collateral to AIG. It looks a lot like a repurchase agreement.

Link

The Federal Reserve Board has authorized the Federal Reserve Bank of New York to borrow securities from certain regulated U.S. insurance subsidiaries of the American International Group (AIG), under section 13(3) of the Federal Reserve Act.

Under this program, the New York Fed will borrow up to $37.8 billion in investment-grade, fixed-income securities from AIG in return for cash collateral. These securities were previously lent by AIG?s insurance company subsidiaries to third parties.

As expected, drawdowns to date under the existing $85 billion New York Fed loan facility have been used, in part, to settle transactions with counterparties returning these third-party securities to AIG. This new program will allow AIG to replenish liquidity used in settling those transactions, while providing enhanced credit protection to the New York Fed and U.S. taxpayers in the form of a security interest in these securities.

 

[First]

Originally posted by: smack Down

Originally posted by: Evan Lieb
I don't see what the problem is when it's a loan they'll have to repay at steep interest. From the article:

On Sept. 16, the Federal Reserve Board agreed to lend AIG $85 billion, using the company's assets as collateral. The loan is expected to be repaid from the proceeds of the asset sales. Interest on the line of credit is steep, and the government took a 79.9% stake in the company.

The problem is that they are never going to repay it.

Wrong, try again.