AIG Sets Record Straight On $$ Owed To Fed

NU Online News Service, Oct. 2, 2:25 p.m. EDT

AIG currently owes the U.S. government $83.6 billion, the company said in a statement designed to clear up what it said is "continuing confusion regarding the amount of assistance AIG has received" and what it still owes.

The company said its total authorized assistance is $182.3 billion, and its total outstanding assistance, defined by spokesman Mark Herr as the amount of authorized money that AIG has not used, is $120.7 billion.

Mr. Herr said while the $83.6 billion owed could conceivably rise if the company is forced to use more of the $120.7 billion, the company has actually been moving in the opposite direction.

Drilling down into the numbers, AIG said The Federal Reserve Bank of New York provided the company a revolving credit facility of up to $60 billion for a five-year period, on which, as of Sept. 2, 2009, AIG owed $38.8 billion including accrued compounding interest and fees.

AIG also received equity capital totaling $44.8 billion in the form of Treasury Department investments in AIG preferred stock through the TARP program. "The U.S. Treasury has also provided a commitment of up to $29.835 billion in connection with the issuance of additional TARP equity, of which AIG has drawn $3.2 billion," the company said.

AIG and the Fed agreed that AIG will issue to the Fed preferred interests in special purpose vehicles holding equity in certain AIG subsidiaries, and in return, AIG's debt to the Fed would be reduced by a total of $25 billion.

Finally, the Fed made loans totaling around $44 billion to financing entities it created, called Maiden Lane II and Maiden Lane III. The loans were used to purchase "value-impaired assets from AIG and its counterparties," such as residential mortgage-backed securities and collateralized debt obligations held by AIG. The loan to Maiden Lane II has a balance of $16.9 billion, and the loan to Maiden Lane III has a balance of $20.2 billion.