NEW YORK--Oct. 1, 2009--
In response to continuing confusion regarding the amount of assistance
AIG has received from the government and the amount it must repay, AIG
provides the following facts:
The U.S. government has provided support to AIG in several forms: direct
equity investments in AIG, loans to AIG, the extension to AIG of a
mostly untapped equity capital facility, access to a commercial paper
funding facility1 and loans to special purpose entities
formed by the Federal Reserve Bank of New York (FRBNY). The loans to
these special purpose entities are to be repaid by those entities, and
not by AIG, from the proceeds of the assets owned by those entities.
LOANS TO AIG, INCLUDING INTEREST AND FEES: $38.8 billion
DETAIL: The FRBNY has provided AIG a revolving credit
facility of up to $60 billion for a five-year period. The US GAO
reported on September 21, 2009 that as of September 2, 2009, AIG
owed $38.8 billion under the FRBNY Facility, including accrued
compounding interest and fees.
EQUITY CAPITAL: $44.8 billion
DETAIL: The U.S. Treasury Department invested $41.6 billion
in AIG preferred stock through its TARP program. The U.S. Treasury
has also provided a commitment of up to $29.835 billion in
connection with the issuance of additional TARP equity, of which,
AIG has drawn $3.2 billion.
NOTE: AIG and the FRBNY have agreed that AIG will issue to
the FRBNY preferred interests in special purpose vehicles holding
equity in certain AIG subsidiaries in exchange for a reduction in
the outstanding debt under the FRBNY facility. When these
transactions close, AIG’s debt to the FRBNY will be reduced by a
total of $25 billion.
ADDITIONAL GOVERNMENT FUNDS PROVIDED FOR THE BENEFIT OF AIG
In the last quarter of 2008, the FRBNY created two financing entities
(Maiden Lane II and Maiden Lane III) and made loans totaling
approximately $44 billion to these entities which used the funds to
purchase value-impaired assets from AIG and its counterparties.
Maiden Lane II received $19.5 billion and used the funds to purchase
residential mortgage-backed securities (RMBS) held in connection with
AIG’s securities lending program. In addition to principal repayments,
the FRBNY receives interest on the loan at LIBOR plus 1% (paid by
proceeds from the RMBS assets). The GAO report notes that as of
September 2, 2009, this loan has a balance of $16.9 billion.
Maiden Lane III received $24.3 billion and used the funds to purchase
collateralized debt obligations (CDOs) from counterparties to AIG
Financial Products Corp. (AIGFP), an AIG subsidiary related to credit
default swap contracts written by AIGFP, in connection with the
termination of such CDS. In addition to principal repayments, the FRBNY
receives interest on the loan at LIBOR plus 1% (paid by proceeds from
the CDOs). The GAO report notes that as of September 2, 2009, this loan
has a balance of $20.2 billion.
TOTAL AUTHORIZED ASSISTANCE: $182.3 BILLION (AS REPORTED IN
THE GAO REPORT)
TOTAL OUTSTANDING ASSISTANCE $120.7 BILLION (AS REPORTED IN THE GAO
OUTSTANDING DEBT AND EQUITY BALANCE REQUIRING REPAYMENT FROM AIG:
$83.6 BILLION (AS REPORTED IN THE GAO REPORT)2
Further detail is available at www.AIG.com.
1 In October 2008, the Fed created a Commercial Paper Funding
Facility (CPFF) to provide a liquidity backstop to U.S. issuers of
commercial paper. AIG’s participation in the CPFF is on the same terms
and conditions as other companies that participate in this program.
Under the CPFF, the Fed purchases commercial paper from participating
AIG affiliates. Proceeds from the issuance of the commercial paper are
being used to refinance AIG’s outstanding commercial paper as it matures
and meet other working capital needs.
2 The difference between the $83.6 billion to be repaid by
AIG and the $120.7 billion in outstanding assistance is due from the
Maiden Lane entities.
Mark Herr, 212-770-3505