On Wednesday evening, the U.S. Federal Reserve authorized an additional $37.8 billion loan to U.S. insurance giant American International Group after authorities took the firm into conservatorship and provided it with an $85 billion loan in September.
"Under this program, the New York Fed will borrow up to $37.8 billion in investment-grade, fixed-income securities from AIG in return for cash collateral. These securities were previously lent by AIG's insurance company subsidiaries to third parties," said a press release from the Fed.
"This new program will allow AIG to replenish liquidity used in settling those transactions, while providing enhanced credit protection to the New York Fed and U.S. taxpayers in the form of a security interest in these securities," the release added.
By Erik Kevin Franco and edited by Stephen Huebl
©CEP News Ltd. 2008