AIG warned of global chaos to make its case
AIG appealed for its fourth US rescue by telling regulators the company’s collapse could cripple money-market funds, force European banks to raise capital,cause competing life insurers to fail and wipe out the taxpayers’ stake in the firm.
By Bloomberg |
NEW YORK | WASHINGTON: American International Group Inc (AIG) appealed for its fourth US rescue by telling regulators the company���s collapse could cripple money-market funds, force European banks to raise capital, cause competing life insurers to fail and wipe out the taxpayers��� stake in the firm.
AIG needed immediate help from the Federal Reserve and Treasury to prevent a ���catastrophic��� collapse that would be worse for markets than the demise last year of Lehman Brothers Holdings Inc, according to a 21-page draft AIG presentation dated Feb. 26, labeled as ���strictly confidential��� and circulated among federal and state regulators.
���What happens to AIG has the potential to trigger a cascading set of further failures which cannot be stopped except by extraordinary means,��� said the presentation by New York-based AIG. ���Insurance is the oxygen of the free enterprise system. Without the promise of protection against life���s adversities, the fundamentals of capitalism are undermined.���
Regulators revised AIG���s bailout last week to ease loan terms and extend $30 billion in fresh capital after the firm posted a $61.7 billion fourth-quarter loss, the worst in US corporate history. Lawmakers are reluctant to give more support beyond the package already in place, worth about $160 billion, because they say regulators haven���t given enough detail about how the funds are being used or when the bailouts will end.
The Fed is ���asking for an open-ended check��� and is ���not going to get��� it, Senator Robert Menendez, a New Jersey Democrat, said last week in Congressional hearings.
AIG needed immediate help from the Federal Reserve and Treasury to prevent a ���catastrophic��� collapse that would be worse for markets than the demise last year of Lehman Brothers Holdings Inc, according to a 21-page draft AIG presentation dated Feb. 26, labeled as ���strictly confidential��� and circulated among federal and state regulators.
���What happens to AIG has the potential to trigger a cascading set of further failures which cannot be stopped except by extraordinary means,��� said the presentation by New York-based AIG. ���Insurance is the oxygen of the free enterprise system. Without the promise of protection against life���s adversities, the fundamentals of capitalism are undermined.���
Regulators revised AIG���s bailout last week to ease loan terms and extend $30 billion in fresh capital after the firm posted a $61.7 billion fourth-quarter loss, the worst in US corporate history. Lawmakers are reluctant to give more support beyond the package already in place, worth about $160 billion, because they say regulators haven���t given enough detail about how the funds are being used or when the bailouts will end.
The Fed is ���asking for an open-ended check��� and is ���not going to get��� it, Senator Robert Menendez, a New Jersey Democrat, said last week in Congressional hearings.
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AIG warned of turmoil around the globe if the government allowed the insurer to fail, adding ���it is questionable whether the economy could tolerate another shock to the system that a failure of AIG would produce.���Download
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