The process of unwinding government support for American International Group Inc. hit a milestone Friday, with the Federal Reserve Bank of New York announcing the full repayment of loans it made to AIG.
The New York Fed's commitment to lend any further funds to AIG also was terminated, ahead of the revolving credit facility's scheduled expiration in September 2013.
The accelerated repayment frees up collateral that AIG can now use to access private debt markets, which the New York Fed described as an "essential step toward facilitating the [Treasury Department's] future sale of the common stock it owns." The AIG Credit Facility Trust, established to hold the Treasury's 79% stake in the firm, has been terminated, and the equity interest sitting in the trust will be exchanged for common stock and transferred to the Treasury.
The New York Fed's loans to the Maiden Lane II LLC and Maiden Lane III LLC special purpose vehicles remain outstanding. Those loans, extended in November 2008 to purchase mortgage securities and address liquidity and capital strains on AIG, are being repaid from the assets in the facilities.
