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AIG, facing liquidity crisis, seeks Fed lifeline
By Lilla Zuill
NEW YORK (Reuters) - Insurer American International Group Inc, working to stave off rating downgrades and shore up the capital of its holding company, has made an unprecedented approach to the Federal Reserve seeking $40 billion in short-term financing, the New York Times said.
Chief Executive Robert Willumstad reached out to the Fed late on Sunday, according to reports in the Times, the Wall Street Journal and business news channel CNBC.
AIG's scramble to secure a Fed lifeline came late into one of the worst-ever days on Wall Street, with Lehman Bros on the verge of collapse, and Bank of America moving to takeover Merrill Lynch & Co.
The Fed normally oversees monetary policy and supervision of banks, but CNBC said AIG was seeking the funds as a temporary measure and planned to repay the Fed with the proceeds from asset sales.
Rating agencies have threatened to downgrade AIG's ratings by Monday morning, said the New York Times.
AIG officials did not immediately respond to requests for comment.
The company, until recently the world's biggest insurer by market capitalization, has been attempting to hammer out an emergency strategic plan after its shares fell nearly 50 percent last week on fears it faced a liquidity crisis.
AIG has been negotiating with various parties including officials from the New York Insurance Department and private equity firms as it seeks ways to free up capital, raise new capital and protect policyholders. Continued...
No matter how big, how powerful, no one is immune to worldly calamity and adversity...
