United States Government Accountability Office
Hi
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of GAO-09-975 (continued)
Overview
of
Federal Assistance Provided to AIG as of September 2, 2009
Dollar in millions
Amount of a
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tanceauthorizedDe
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cription of the federal a
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tance DebtEquity
Out
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tandin
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balance
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ource
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to repay the
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overnmentImplementedFederalRe
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erve
FRBNY created a Revolving Credit Facility toprovide AIG a revolving loan that AIG and itssubsidiaries could use to enhance their liquidity.In exchange for the facility, for $0.5 million, aTreasury trust received Series C preferred stockfor the benefit of the Treasury, which gaveTreasury a 77.9 percent voting interest in AIG.$60,000
a
$38,792.5 Proceeds from dispositions of AIGbusinesses, internal cash flows, andrestructuring part of the Revolving CreditFacility from debt into equity. The initial feepaid by AIG was reduced by $0.5 million topay for the Series C shares and will not berepaid.FRBNY created SPV—Maiden Lane II—toprovide AIG liquidity by purchasing residentialmortgage-backed securities from AIG lifeinsurance companies. FRBNY provided a loan tothe SPV for the purchases. It also terminated apreviously established securities lendingprogram with AIG.22,50016,899 Proceeds from the assets in Maiden Lane IIwill be used to repay the FRBNY loan toMaiden Lane II.FRBNY created a SPV called Maiden Lane III toprovide AIG liquidity by purchasing CDOs fromAIG Financial Products’ counterparties inconnection with termination of credit defaultswaps. FRBNY again provided a loan to the SPVfor the purchases.30,00020,196 Proceeds from the assets in Maiden LaneIII will be used to repay the FRBNY loan.
Trea
s
ury
Treasury purchased Series D cumulativepreferred stock from AIG. AIG used the proceedsto pay down the Revolving Credit Facility. Theseshares were later exchanged for Series Enoncumulative preferred shares. Unpaiddividends on the series D shares were added tothe Treasury’s equity in the Series E shares.40,000 41,605 Proceeds from dispositions of AIGbusinesses and internal cash flows of AIG.Treasury purchased Series F noncumulativepreferred shares of AIG and is allowing AIG todraw up to $29,835 million through an equityfacility to meet its liquidity and capital needs.Amounts drawn by AIG represent the cost of thefederal equity interest in these shares.29,835 3,206
b
Proceeds from dispositions of AIGbusinesses and internal cash flows of AIG.
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ubtotal
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$112,500$69,835
Total authorized and out
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tandin
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tance
c
$182,335$120,698.5
Pendin
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AIG created two SPVs to hold the shares of twoof its foreign life insurance businesses toenhance AIG’s capital and liquidity, and tofacilitate an orderly restructuring of AIG. TheRevolving Credit Facility will be reduced by theamount of preferred equity interest in the SPVsto be received by FRBNY.0(25,000
d
)0Proceeds from the public sale of the SPVs’common stock could be used to buy out thefederal preferred equity and pay down partof the Revolving Credit Facility.AIG will create SPVs that will issue up to $8,500million in notes to FRBNY, which will be fundedwith a loan from FRBNY. AIG will use theproceeds to pay down part of the RevolvingCredit Facility.(8,500
d
)0FRBNY’s loan to the SPVs will be repaidfrom net cash flows of the life insurancepolicies.
Source: AIG SEC filings, Federal Reserve, and Treasury data
.
a
The facility was initially $85 billion but was reduced to $60 billion in November 2008.
b
Amount as of September 8, 2009.
c
Does not include AIG’s participation in the Federal Reserve’s Commercial Paper Funding Facility.
d
These transactions have not been completed and are not included in the total assistance provided to AIG. Theamount of the Revolving Credit Facility will be decreased by an equal amount upon completion.
assistance show some progress in AIG’s ability to repaythe federal assistance; however, improvement in thestability of AIG’s business depends on the long-termhealth of the company, market conditions, and continuedgovernment support. Therefore, the ultimate success of AIG’s restructuring and repayment efforts remainsuncertain. GAO plans to continue to review the FederalReserve’s and Treasury’s monitoring efforts and report onthese indicators to determine the likelihood of AIGrepaying the government’s assistance in full and thegovernment recouping its investment.