Government loans AIG an additional $30B

WASHINGTON (AP) — The government on Monday unveiled a revamped rescue package to insurance giant American International Group and will provide the troubled company with another $30 billion in taxpayer money on an “as needed” basis.

The new package comes as AIG has burned through cash and been unable to find buyers for pieces of its company that it hoped to sell to repay the government on its existing aid package, which totals some $150 billion.

In an interview on NBC’s “Today” show Monday morning, AIG Chairman and Chief Executive Edward Liddy said: “We’re going to be able to pay back the Federal Reserve. The new $30 billion is a standby line. It’s not necessarily something that we think we’ll have to draw on right away.”

But Liddy backed off earlier statements about paying back taxpayers in full within two years.

“It is clearly our goal. But we need some help from the financial marketplace,” he said. “The Federal Reserve debt we’ll pay back clearly in two years. And we’d like to make meaningful progress, paying back the original [government] investment.”

The announcement came as AIG, once the world’s largest insurer, reported Monday it lost $61.7 billion in the fourth quarter, the biggest quarterly loss in U.S. corporate history.

Under the new package, the Fed will take up to a $26 billion stake in two international units — Asia-based American International Assurance Co. and American Life Insurance Co., which operates in 50 countries. The Fed also will make $8.5 billion in new loans to benefit the domestic life insurance subsidiaries of AIG.

It marked the fourth time the government has stepped in to help AIG. Its initial lifeline came in September, when the government effectively seized control of the company, taking a nearly 80 percent ownership stake and replacing top management.

The new package is designed to enhance the company’s capital and liquidity to facilitate the “orderly completion of the company’s global divestiture program,” the Treasury Department and the Fed said in a joint announcement early Monday.

The fresh $30 billion will come from the government’s $700 billion financial bailout pot. AIG will be allowed to draw the money “as needed over time,” the government said. The company received a $40 billion cash infusion from the bailout fund in November, when the government last revamped AIG’s rescue package.