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Government grants $150 billion financial-rescue package to AIG

2008-11-11 20:45:46 (GMT) (Caymanmama.com - Business News)

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AIG

Manhattan, New York (CaymanMama.com) — New-York based American International Group faced economic woes just like every other U.S. company during these times of financial depression, but in a report by the Associated Press, the insurance company has been given a government record bailout for any private company.

On Monday, the government granted a new $150 billion financial-rescue package to AIG, including $40 billion for partial ownership. Announced by the Federal Reserve and the Treasury Department, the bailout plan was given in light of the original bailout relief offered by the Fed to AIG in September wouldn’t be sufficient enough to stabilize the crumbling company.

Fed officials, expressed confidence that the money would be repaid to taxpayers.

The $40 billion allotment comes from the recent $700 billion government bailout package. According to the report, “the government is buying preferred shares of AIG stock, giving taxpayers an ownership stake in the company. In turn, restrictions will be placed on executive compensation at the firm. ”

The actions were needed to “keep the company strong and facilitate its ability to complete its restructuring process successfully,” the Federal Reserve said.

White House press secretary Dana Perino said it would also be positive for the vulnerable U.S. economic condition.

The new package “will allow AIG to continue to restructure themselves in a way that will not hurt the overall economy. AIG is a large, interconnected firm,” she continued.

The failure of AIG would be potentially disastrous for the country’s economic health prompting the government to take proactive measures.



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