Litigation

Revised AIG Bailout Package to Be Unveiled Monday November 10, 2008?

By John Darer

Various news agencies including Reuters and the Wall Street Journal suggested on Sunday that a restructured rescue plan is close to being put in place for American International Group Inc.(AIG) and may be announced on Monday November 10, 2008. It was said that the total package will rise to $150B.

Purportedly the revised bailout package would make borrowing terms easier for AIG. For example, the interest on the initial $85B bailout component would drop from 8.5 percent plus 3-month LIBOR interest-rate benchmark to 3 percent plus LIBOR, according to the Wall Street Journal. The loan would change from a 2 year $85B loan to a 5 year $60B loan.The government also reportedly would inject $40 billion into AIG in exchange for preferred stock carrying a 10% dividend through the Troubled Asset Relief Program ("TARP")

The Wall Street Journal also suggested that the U.S. government expected to cancel the bulk of AIG's credit default swap agreements via a massive purchase of underlying real estate assets It is these default swap agreements that led to massive collateral calls sucking cash from the company that led to the initial September 16, 2008 Fed action. 

Link to Reuters report "AIG board nears approval of revised Federal plan

Link to Wall Street Journal Report "Government, AIG near Pact to Scrap Original Rescue Deal"

Full post as published by Structured Settlements 4Real on November 09, 2008 (boomark / email).