AIG Added Received TARP grant expenditures, according to the

 

Friday, Mar 06,2009, 9:39:12 PM   Click:

AIG Added Received TARP grant expenditures, according to the Panel Alyn Ackermann
The federal government has received the American International Group Inc. assets valued at 14.8 billion dollars when he only paid $ 40 billion as part of $ 150 billion rescue plan for the insurer, a control panel of the Congress said .

The difference in value represents a subsidy of $ 25.2 billion - 63% of total Troubled Asset Relief Program amount used for AIG (NYSE: AIG), according to a report of the Monitoring Committee of the Congress for the Troubled Asset Relief Program.

AIG $ 150 billion federal rescue, as revised and expanded in November, including $ 40 billion of the sheet of default systems Important Institutions Program, which has purchased perpetual preferred shares of the company and warrants equal to 2% of the issued and outstanding. The Federal Reserve Bank of New York, which provided the remaining $ 110 billion lending and liquidity package holds warrants for almost 80% of company equity (BestWire, Jan. 8. 2009).

The panel was created by Congress to oversee the $ 700 billion TARP program, $ 350 billion that was spent.

The panel found that for programs of fashion for only two qualifying individually designed rescue plans - AIG and Citigroup Inc. - the Treasury Department has used the same models used in a larger program to promote health Loans from banks.

This has resulted in significantly higher subsidies for both companies, the group said in its report.

It said that "the evaluation of operations is critical, because then Treasury Secretary Henry Paulson assured the public that the investments of the TARP money is solid, given in return for full value."

Although the advisory group and its consultants "only on the discount to face value than the Treasury took over its TARP investment," the report states that in the case of AIG, they recognize that the investment as part of a broader strategy by the Government to the proposal of the company. "

Proceeds from investment in AIG TARP were used to repay a portion of a loan made to the original $ 85 billion rescue plan announced in September to keep AIG from bankruptcy.

The group studied the 10 TARP major investments to date, including those involving AIG and Citigroup.

He found that for the other eight, under the bank health program - Program to purchase the capital created in October 2008 - the government grants 22% on average. Citigroup's grant was 50%, and AIG, 63%.

The advisory group said that a total of 317 financial institutions have received a total of $ 194 billion in the PRC, 23 January 2009, the first eight are $ 124 billion, or 64% of the total.

Efforts to get comments from members of the supervisory committee and the Treasury Department have not been successful.

The $ 150 billion rescue plan for AIG helped stabilize its finances and to cancel more than $ 60 billion of credit default swaps written on securities backed by mortgages, which triggered the liquidity crisis that led giant insurer on the brink of bankruptcy. The company is reorganizing and trying to sell the operating companies to repay federal aid (BestWire, Dec. 24, 2008).

Most of the AIG insurance companies currently have a Best's financial strength rating of A (Excellent) with a negative outlook.

Shares of $ 1.05 AIG were in afternoon trading on February 9, up 0.96% from the close.

(By Alyn Ackermann, senior editor, BestWeek: Alyn.Ackermann @ ambest.com)

Copyright © 2009 hours Best Company, Inc. The federal government has received the American International Group Inc. assets valued at 14.8 billion dollars when he only paid $ 40 billion as part of $ 150 billion rescue plan for insurer a control panel of the Congress said.