Wednesday, October 8, 2008

Fed Gives Green Light To New York Fed To Pump Up To Another $37.8 Billion Into AIG

The Federal Reserve Board has authorized the Federal Reserve Bank of New York to borrow securities from certain regulated U.S. insurance subsidiaries of the American International Group (AIG), under section 13(3) of the Federal Reserve Act.

Under this program, the New York Fed has the green light from the Fed to borrow up to $37.8 billion in "investment-grade" (Yeah, right), fixed-income securities from AIG in return for cash collateral. These securities were previously lent by AIG’s insurance company subsidiaries to third parties (And apparently, the third parties don't want them as collateral, anymore).

For those keeping score, this is in ADDITION to the drawdowns to date of $85 billion under the original New York Fed loan facility.

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