Reuters is reporting that a new new bailout for AIG is almost done. This would be the third attempt at rescuing the fallen giant, whose ventures into structured finance and derivatives brought down an otherwise well run, money making insurer.
American International Group Inc is close to a deal with the U.S. government that would ease the terms of its bailout, provide a further equity commitment and help it pay down debt, a person familiar with the matter said on Saturday.
The revision would be the latest sign of how federal regulators are having to tweak bailout packages for financial institutions deemed too big to fail as the economy and markets worsen.
The board of the troubled insurer is due to meet on Sunday to vote on the deal, which could be announced when AIG reports its quarterly results on Monday, the source said.
That would be just days after the government agreed to boost its equity stake in Citigroup Inc to as much as 36 percent in a bid to bolster another financial giant that taxpayers had already poured billions of dollars into.
The revised AIG agreement is expected to include an additional equity commitment of about $30 billion, more lenient terms on an existing preferred investment, and a lower interest rate on a $60 billion government credit line, the source said.
As if that’s not enough, the new commitment gives to the beggers at AIG a fourth bite at the apple — they would get the ability to “issue preferred stock to the government at a later date.”
We find out tomorrow if AIG’s loss is as much as $60 billion for Q4. Its caused by write downs of derivatives, credit default swaps, and mortgage backed securities.
My favorite part of the Reuters story: The AIG loss works out to about $460,000 per minute.
Exclusive: AIG near deal on new terms of bailout
Reuters, Sun Mar 1, 2009 8:41am EST