Greenberg: AIG needs more help

AIG is in need of a federal government guaranty to meet counterparty collateral requirements, its former CEO Maurice Greenberg, said today.
DEC 02, 2008
By  Bloomberg
Despite receiving a $60 billion lifeline, American International Group Inc. is in need of a federal government guaranty to meet counterparty collateral requirements, the insurance giant’s former chief executive, Maurice Greenberg, said today. Collateral requirements have gobbled up a majority of the government rescue funds AIG of New York has received thus far and a guaranty would enable the insurance company to deploy funds elsewhere to help improve the U.S financial system, Mr. Greenberg wrote in a Wall Street Journal opinion piece today. Mr. Greenberg praised the government’s response to struggling Citigroup Inc. of New York, which is receiving $20 billion from the Federal Reserve and $306 billion in guarantees for troubled mortgages(InvestmentNews, Nov. 24), and said a similar approach should be aimed at AIG. “[AIG] itself cannot be so burdened with interest payments that it is forced into effective liquidation, making jobs impossible to keep and decreasing the likelihood taxpayers will be repaid,” Mr. Greenberg wrote. “The government should instead apply the same principles it is applying to Citigroup to create a win-win situation for AIG and its stakeholders.” AIG was initially given an $85 billion loan for two years but the terms were adjusted to $60 billion over a five-year period under the federal government’s Troubled Asset Relief Program (InvestmentNews, Nov. 10).

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