11 Nov 2008

Govt bailout boosted for AIG to $US150b

10:02 am on 11 November 2008

The US government has restructured its bailout of American International Group Inc. The package is now a record $US150 billion with easier terms, after a smaller rescue plan failed to stabilize the giant insurance company.

The US Federal Reserve and the Treasury Department announced the new plan on Monday as AIG reported a record third-quarter loss of $US24.47 billion.

The new package is at least $US27 billion more than was previously extended.

AIG nearly collapsed when the housing downturn in the United States mushroomed into a global credit crisis.

Under the new plan, the government will get a $US40 billion equity stake in AIG,and will spend up to $US22.5 billion to buy residential mortgage securities.

It will also reduce a previously announced credit line to $60 billion from $85 billion, and lower interest rates on borrowings.

The funding comes from a $7US00 billion financial bailout package passed into law last month.

Th package was created after the government announced the original $US85 billion bailout package for AIG on 16 September.


AIG has posted a quarterly loss of $US24.47 billion compared with a profit of $US3.09 billion a year earlier.

Revenue fell to $US898 million from $US29.8 billion. AIG also had $US1.39 billion in catastrophe losses, primarily from Hurricanes Gustav and Ike.