The Federal Reserve Board will provide as much as $37.8 billion in additional liquidity to American International Group Inc.'s regulated insurance subsidiaries after rescuing the company with an $85 billion loan last month.
The Fed board used emergency powers to authorize the Federal Reserve Bank of New York to borrow up to $37.8 billion in investment-grade, fixed-income securities from AIG in return for cash collateral, the Fed said. The action will help AIG "replenish liquidity" and provide "enhanced credit protection to the New York Fed and U.S. taxpayers," the central bank said.
Edward Liddy, who was appointed by the government to run the company as its chief executive, has been trying to sell units to repay the original loan, which he had said was big enough. AIG, running short on cash after three quarterly losses of more than $18 billion, agreed Sept. 16 to a government takeover in which the government received a 79.9% stake.
During congressional hearings Tuesday on AIG's collapse, the New York company was criticized for spending $440,000 on a California conference at a beachside resort less than a week after AIG was rescued.