Reports Name AIG's Derivative Counterparties

Reports name AIG's derivative counterparties, including BMO
NEW YORK _ The U.S. government bailout of insurance giant American International Group Inc. has benefitted at least two-dozen U.S. and foreign financial institutions _ including the Bank of Montreal _ who together collected some $50 billion, news reports said Saturday.

AIG _ once the world's largest insurer _ is paying money to its counterparties because it had agreed to guarantee them against losses from credit default swaps they had invested in.

Citing a confidential document and people familiar with the matter, the Wall Street Journal said recipients of AIG money include Goldman Sachs Group Inc. and Germany's Deutsche Bank AG, each of which received roughly $6 billion in payments between mid-September and December 2008.

Also receiving AIG money last year were Merrill Lynch, now part of Bank of America Corp., French bank Societe Generale SA and, to a lessor extent, Morgan Stanley, Royal Bank of Scotland Group PLC and HSBC Holdings PLC, the newspaper said.

Meanwhile, business magazine Fortune issued its own list Saturday of 15 banks that received AIG money, including: Bank of Montreal; Calyon, Credit Agricole of France; UBS; Barclays; Coral Purchasing, DZ Bank of Germany and Rabobank of the Netherlands. Fortune, which credited a ``reliable source,'' did not supply dollar amounts that each bank received.

The disclosures come the same week the U.S. Federal Reserve refused a congressional request for the names of all AIG's derivative counterparties. At a hearing Thursday, Federal Reserve vice-chairman David Kohn declined to reveal who had been made whole after deals with AIG went bad, arguing the information would undermine what little confidence remains in the financial markets.

AIG on Monday reported a $61.7-billion quarterly loss, the worst in U.S. history. The same day, the U.S. Treasury provided AIG as much as $30 billion in additional aid from the $700-billion financial bailout program, bringing the company's total bailout to more than $170 billion since September. The government now owns nearly 80 per cent of the company.

AIG has been forced to seek more help in part because of the recession and its falling stock price, now well under $1. Among its biggest problems: it can't sell assets to pay back government loans because the credit crisis is preventing would-be buyers from getting financing to complete such deals.

A representative with New York City-based AIG wasn't immediately available to comment.

Copyright © 2009 The Canadian Press NEW YORK _ The U.S. government bailout of insurance giant American International Group Inc. has benefitted at least two-dozen U.S.