Washington – The federal government’s stake in American International Group Inc. (AIG) was expanded yesterday as the New York insurer asked for another $38 billion in cash. The Federal Reserve quickly agreed, and will hold as collateral $38 billion of investment-grade securities owned by AIG.
An AIG spokesperson said last week that it had already drawn $61 billion from the $85 billion line already extended by the central bank on Sept. 16. That action was not directly related to insurance operations, said an industry expert, but the new request for cash will support AIG’s life insurance companies. Because the loan will be collateralized by corporate bonds, the government considers this loan less risky than that for the previous $85 billion.
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