AIG looks to Fed for lifeline
As hopes of a private-sector bailout of AIG begin to dim, the government is reconsidering throwing a lifeline to the insurer, according to CNBC.
As hopes of a private-sector bailout of AIG begin to dim, the government is reconsidering throwing a lifeline to the insurer, according to CNBC.
The New York Federal Reserve Bank board is discussing the future of American International Group Inc. of New York.
News of the discussion comes in the wake of word that discussions about a $75 billion bridge loan from Goldman Sachs Group Inc. and JPMorgan Chase & Co. to the embattled insurer are “definitively dead,” according to CNBC, citing a person involved in the Fed meeting.
Just yesterday, Treasury Secretary Henry Paulson Jr. said that public funds would not be used to bail out the insurance giant.
“What is going on right now in New York has got nothing to do with any bridge loan from the government,” Mr. Paulson said at a press conference in Washington.
In an interview with CNBC, Maurice Greenberg, ex-CEO of AIG, said it would be a loss to America if the insurer went bankrupt.
If there is no bridge loan from either the private sector or the federal government, and if the ratings agencies don’t give AIG “breathing space,” the results would be disastrous, he said. The problem isn’t in the company’s solvency, but its liquidity, Mr. Greenberg added.
“I think if there’s an interim bridge loan that can be worked out, the company can survive,” he noted.
“What I’m saying is that if you can’t raise it any other way in the private sector, then the Fed should make that bridge loan. It’s not a gift, it’s not a bailout, because it’s a solvent company,” Mr. Greenberg said.
“[AIG] has a cash problem currently, and that’s different than many other types of bailouts that have been talked about,” he said.
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