AIG
AIG Investment Program
Policy Area:
Financial Sector Policy
Economic Target:
AIG
Action Type:
Equity Purchase
Maximum Amount:
$70.00 billion
Amount Spent:
$16.32 billion
Deficit Impact:
$22.00 billion In September 2008, the Federal Reserve and the Treasury determined that an AIG default could have placed enormous financial pressures and losses on AIGs creditors and counterparties, triggered disruptions in commercial paper markets, raised borrowing costs, and could have diminished the availability of credit, all undermining business and investor confidence.
Notes:
Amount spent indicates credit issued as of 12/7/2012 (http://www.ustreas.gov/initiatives/eesa/transactions.shtml). Deficit impact calculated by CRFB, using CBO's practice of estimating costs on a risk-adjusted present value basis. Maximum amount specified in Treasury term sheet.
Deficit impact is CBO's estimate of the total cost of the AIG program as last stated in the November 2010 Report on TARP.
Fed Line of Credit to AIG
Date:
September 16, 2008
Policy Area:
Financial Sector Policy
Economic Target:
AIG
Action Type:
Loans
Maximum Amount:
$60.00 billion The Fed originally created a credit-lending facility from which AIG was allowed to draw up to $85 billion.
Notes:
Amount spent is current as of 1/19/2011 (http://www.federalreserve.gov/releases/h41/Current/). Activities of the Federal Reserve are not directly recorded in the federal budget. However, each year the Federal Reserve remits a portion of its earnings to the general treasury. This remittance is generally in the range of $20-$30 billion per year, but the CBO estimates that the Fed's earnings will be lower by approximately $90 billion over the next ten years.
Fed Loan to AIG
Date:
October 8, 2008
Policy Area:
Financial Sector Policy
Economic Target:
AIG
Action Type:
Loans
Maximum Amount:
$37.80 billion The Federal Reserve took $37.8 billion in investment-grade, fixed-income securities from AIG, in return for cash.
Source:
Notes:
On November 10th, upon the Federal Reserve's creation of two new limited liability companies formed to assist AIG with its bad assets, the Fed announced that these security-collateralized loans would be repaid by AIG and terminated.
Activities of the Federal Reserve are not directly recorded in the federal budget. However, each year the Federal Reserve remits a portion of its earnings to the general treasury. This remittance is generally in the range of $20-$30 billion per year, but the CBO estimates that the Fed's earnings will be lower by approximately $90 billion over the next ten years.
Fed Purchase of AIG Mortgage-Backed Securities
Date:
November 10, 2008
Policy Area:
Financial Sector Policy
Economic Target:
AIG
Action Type:
Equity Purchase
Maximum Amount:
$23.00 billion
Amount Spent:
$0.06 billion Federal Reserve provides up to $23 billion in loans to a limited liability company, 'Maiden Lane II,' formed to purchase residential mortgage-backed securities in AIG's portfolio.
Source:
Notes:
Amount spent indicates loans outstanding as of 1/23/2013 (http://www.federalreserve.gov/releases/h41/Current/). Activities of the Federal Reserve are not directly recorded in the federal budget. However, each year the Federal Reserve remits a portion of its earnings to the general treasury. This remittance is generally in the range of $20-$30 billion per year, but the CBO estimates that the Fed's earnings will be lower by approximately $90 billion over the next ten years.
Fed Purchase of AIG Collateralized Debt Obligations
Date:
November 10, 2008
Policy Area:
Financial Sector Policy
Economic Target:
AIG
Action Type:
Equity Purchase
Maximum Amount:
$30.00 billion
Amount Spent:
$0.02 billion Federal Reserve agreed to provide $30 billion in loans to a limited liability company, 'Maiden Lane III,' formed to purchase collateralized debt obligations (CDOs) for which AIG had written credit-default swap contracts.
Source:
Notes:
Amount spent represents loan outstanding as of 1/16/2013 (http://www.federalreserve.gov/releases/h41/Current/). Activities of the Federal Reserve are not directly recorded in the federal budget. However, each year the Federal Reserve remits a portion of its earnings to the general treasury. This remittance is generally in the range of $20-$30 billion per year, but the CBO estimates that the Fed's earnings will be lower by approximately $90 billion over the next ten years.
Purchase of AIG Preferred Stock
Date:
November 10, 2008
Policy Area:
Financial Sector Policy
Economic Target:
AIG
Action Type:
Equity Purchase
Maximum Amount:
$40.00 billion
Amount Spent:
$8.78 billion
Deficit Impact:
$10.90 billion Purchase of $40 billion in newly-issued AIG preferred shares by Treasury Department under Trouble Asset Relief Program (TARP).
On 3/2/2009, the Treasury announced that it would exchange its "Series D" preferred stock for "Series E" non-cumulative perpetual preferred stock. This change is intended to improve the quality of AIG's equity and thus its overall market position.
On 1/14/2011, Treasury exchanged the $40 billion of preferred stock for an equivalent amount of common stock, equal to 925 million shares of AIG.
Notes:
Amount spent indicates credit issued as of 12/7/2012 (http://www.ustreas.gov/initiatives/eesa/transactions.shtml). Deficit impact calculated by CRFB, using CBO's practice of estimating costs on a risk-adjusted present value basis.
Deficit impact is derived from CBO's overall subsidy rate for assistance to AIG (13%), as listed in CBO's January 2010 baseline. However, in its Preliminary Analysis of the President's Budget, the CBO revised its total cost estimate for TARP up by $10 billion, stating that most of the revision comes from an updated estimate of support to AIG. Thus, the subsidy rate for AIG support is now closer to 27%.
AIG Equity Capital Facility
Date:
March 2, 2009
Policy Area:
Financial Sector Policy
Economic Target:
AIG
Action Type:
Equity Purchase
Maximum Amount:
$29.84 billion
Amount Spent:
$7.54 billion
Deficit Impact:
$8.10 billion The Treasury will allow AIG to receive up $30 billion dollars in exchange for AIG preferred stock. Actions taken in coordination with a restructuring of the Fed's line of credit to AIG.
On 1/14/2011, after AIG repaid the New York Fed's credit facility, Treasury transferred part of this facility into 167 million shares of common stock, using the remaining money to hold $20 billion in AIG subsidiaries.
Notes:
Maximum amount specified in Treasury term sheet. Amount spent current as of 3/21/2012, as reported in Treasury transaction reports.
Deficit impact is derived from CBO's overall subsidy rate for assistance to AIG (13%), as listed in CBO's January 2010 baseline. However, in its November 2010 Report on TARP, CBO estimated that the total cost of AIG assistance would be $14 billion. It is unclear how the deficit impact breaks down between the two types of assistance.
