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AIG Has Already Spent Most of $123B Bailout

Ailing insurance giant warns it may need more help

By Clay Dillow, Newser Staff

Posted Oct 24, 2008 9:05 AM CDT

(Newser) – Struggling insurance giant AIG, recipient of the largest government bailout in history, has burned through three-quarters of its $123 billion financial lifeline, the Washington Post reports. As of yesterday, AIG has withdrawn $90.3 billion from the Federal Reserve’s credit line, mostly to pay off bad bets insuring toxic mortgage investments made by banks, and the company’s new CEO warned that the bailout may not be enough.

In September, the Federal Reserve Bank of New York gave AIG an $85 billion loan to keep it afloat, and the Fed later offered $38 billion more in credit liquidity. The insurer has tapped $72 billion of the first loan and $18 billion of the second. Attempts to sell its assets for cash have been hindered by a lack of financing, a problem AIG helped to create.

[Images (3)]

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People walk in front of AIG offices Wednesday, Sept. 17, 2008 in New York. (AP Photo/Mark Lennihan)

American International Group has spent the better part of a $123 federal lifeline meant to keep the company afloat. (AP Photo/Mark Lennihan)

Japan headquarters of AIG, American Insurance Group, Inc., soars in downtown in Tokyo Wednesday, Sept. 17, 2008. (AP Photo/Katsumi Kasahara)

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It can't be good that they have to pay out so much more money. They're obviously in a lousy spot.
- David Schiff, Schiff's Insurance Observer

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AIG Has Already Spent Most of $123B Bailout