Fed to give AIG $85 billion loan and take 80% stake
By Michael J. De La Merced and Eric Dash
Wednesday, September 17, 2008
In an extraordinary turn, the Federal Reserve agreed Tuesday night to take a nearly 80 percent stake in the troubled giant insurance company, the American International Group, in exchange for an $85 billion loan. http://www.iht.com/bin/printfriendly.php?id=16217125
The Fed, apparently unable to convince private-sector companies to provide the cash, did the deal itself. That raises the question of whether the financial-services industry really felt that AIG's demise would have been catastrophic. The only alternative explanation would be that Wall Street won a game of chicken with the Fed... http://www.forbes.com/markets/2008/09/16/aig-fed-bailout-markets-equity-cx_mm_0916markets50.html
With time potentially running out due to credit rating downgrades that have threatened AIG's ability to operate, it reportedly reached a deal with the Federal Reserve, gaining an $85 billion bridge loan in return for going into conservatorship, with the Fed taking an 80% stake in the insurer. http://www.forbes.com/2008/09/16/briefing-outlook-aig-markets-equity-cx_ss_0916markets48_print.html
