Fed Names Trustees For AIG

WASHINGTON–The Federal Reserve Board of New York has named three trustees, including Jill Considine, a former New York banking commissioner, to control the government's 79.9 percent share of American International Group.

Ms. Considine is currently on the board of troubled bond insurer Ambac. The other trustees are Chester B. Feldberg, former chairman of Barclays Americas, and Douglas L. Foshee, president and chief executive officer of El Paso Corp.

The New York Fed said the appointments were made with the full support of the Treasury Department.

The new trustees will control the taxpayers' stake in AIG through the so-called “AIG Credit Facility Trust.”

Appointment of independent trustees to manage the government's share of AIG stock was part of the Sept. 17 agreement with AIG under which the government loaned the company $85 billion in order to stave off its collapse.

The agreement has since been modified to continue for up to five years while AIG sells insurance and other subsidiaries on an orderly basis to pay the government loan.

The trustees will have absolute discretion and control over the AIG stock, subject only to the terms of the Trust Agreement, and will exercise all rights, powers and privileges of a shareholder of AIG, the New York Fed said in a statement issued Friday.

The trustees will not sit on the board of directors of AIG. Day-to-day management of AIG will remain with the persons “charged with such management,” the New York Fed said in its statement.

The present chief executive officer of AIG is Edward Liddy, former chairman and CEO of Allstate.

The statement added that, to avoid possible conflicts with the New York Fed's supervisory and monetary policy functions, the trust has been structured so the New York Fed “cannot exercise any discretion or control over the voting and consent rights associated with the equity interest in AIG.”

The Fed said it will, however, continue to monitor closely the financial operations of AIG in connection with its role as lender.

Ms. Considine also serves as a senior advisor of the Depository Trust Company and was its chairman from 1999 to 2007.

Prior to joining DTC in January 1999, she was president of the New York Clearing House Association. Before joining the Clearing House, she had been managing director and chief administrative officer at American Express Bank Ltd since 1991 and a member of its board of directors.

She served as New York superintendent of banks from 1985 to 1991.