Open

Coming up

Don't miss

Replay


LATEST SHOWS

REPORTERS

Exclusive: an unlikely victim of the 'War on Terror'

Read more

#THE 51%

Sweden: A Feminist's Paradise?

Read more

FRANCE IN FOCUS

Politics: parties under pressure

Read more

FOCUS

In Burma, the rise of radical Buddhism

Read more

ENCORE!

Haute Couture: the hand-stitched clothing made in Paris that sells for the price of small yachts

Read more

IN THE PAPERS

'Caution, another Cast Lead lies ahead'

Read more

BUSINESS DAILY

Rising into the ranks of Haute Couture

Read more

DEBATE

Gaza: How to Stop the Spiral? Israel Readies For Ground Offensive

Read more

DEBATE

Gaza: How to Stop the Spiral? Israel Readies For Ground Offensive (part 2)

Read more

  • Exclusive: an unlikely victim of the 'War on Terror'

    Read more

  • The third-place playoff: the World Cup game no one wants to play

    Read more

  • Suspect in Brussels Jewish Museum shooting drops extradition appeal

    Read more

  • Kurdish forces take over two oilfields in northern Iraq

    Read more

  • Are French high school students getting smarter?

    Read more

  • Italy’s Trentin wins seventh stage of Tour de France

    Read more

  • Disgraced Suarez leaves Liverpool for Barcelona

    Read more

  • In pictures: Chanel, Dior and so much more at the Paris couture shows

    Read more

  • French ‘Civic Service’ eyes massive expansion amid huge demand

    Read more

  • Amazon snubs French free delivery ban with one-cent charge

    Read more

  • In Pictures: Petrol station hit by Hamas rockets

    Read more

  • Manhunt as FIFA partner flees Rio hotel to avoid arrest

    Read more

  • Video: Living in Tel Aviv, under threat of rocket attack

    Read more

  • Video: Palestinians fear full Israeli military offensive in Gaza

    Read more

  • Ukrainian forces close in on Donetsk

    Read more

US government unveil $150 billion new AIG bailout package

©

Text by Christopher MOORE , AFP

Latest update : 2008-12-09

US government has increased the aid package for insurer American International Group from $85 to $150 billion. Meanwhile, the American troubled insurance company annouced a record $24.5 billion in net losses in the third quarter of the year.

The US government early Monday announced the restructuring of the government's 85-billion-dollar financial aid package that was given to insurer American International Group in September.
  
Under the restructuring, the US Treasury will purchase 40 billion dollars of newly issued AIG preferred shares under the Troubled Asset Relief Program.
  
This purchase will allow the Federal Reserve to reduce from 85 billion dollars to 60 billion dollars the total amount available under the credit facility established by the Federal Reserve Bank of New York on September 16, 2008, said a joint statement issued by the US Treasury Department and the Federal Reserve.
  
The Federal Reserve Bank of New York will also modify its credit line offered AIG. According to the statement, the interest rate on the credit line will be reduced to three-month Libor plus 300 basis points from the current rate of three-month Libor plus 850 basis points, and the fee on undrawn funds will be reduced to 75 basis points from the current rate of 850 basis points.
  
The length of the facility will be extended from two years to five years.
  
The government's move to increase aid to AIG to a total of 150 billion dollars as the troubled insurer announced 24.5 billion dollars in net losses in the third quarter of the year.
  
The US Federal Reserve Board has authorized the New York Fed to establish two new lending facilities relating to AIG.
  
In one new facility, the New York Fed will lend up to 22.5 billion dollars to a newly formed limited liability company (LLC) to fund the LLC’s purchase of residential mortgage-backed securities from AIG's US securities lending collateral portfolio.
  
In the second new facility, the New York Fed will lend up to 30 billion dollars to a newly formed LLC to fund the LLC's purchase of multi-sector collateralized debt obligations, on which AIG has written credit default swap contracts.
  
"These new measures establish a more durable capital structure, resolve liquidity issues, facilitate AIG's execution of its plan to sell certain of its businesses in an orderly manner, promote market stability, and protect the interests of the U.S. government and taxpayers," The Federal Reserve and the Treasury Department said in the statement.
  

Date created : 2008-11-10

Comments

COMMENT(S)