According to the revised agreement, AIG will issue the assets included two independent institutions

Although the new agreement will significantly ease this family shaky insurers conditions and requirements, but will also allow the U.S. government to play an unprecedented role in the financial market participants. Moreover, this new agreement is also likely to cause strong political opposition, especially in Congress among democratic parties, because although the Ministry of Finance increased the obligations assumed by AIG, but so far still refused to beleaguered Detroit Big Three stretch out of hand. Under the new agreement, the Government will invest more money AIG, including $ 40 billion capital injection come from the Treasury issued $ 700 billion Troubled Asset Relief Program. So the U.S. government is also providing substantial interest earned less than the initial loans, while also making some impact on AIG from high-risk financial instruments to bring these tools almost led AIG filed for bankruptcy protection.
The government rescue package of $ 150 billion, including $ 60 billion in loans, $ 40 billion in preferred stock investments and $ 50 billion capital injection, the last major purchase would be transferred into the hands of the two is used to separate the problem of asset financing institutions. This new program is equivalent to the default $ 85 billion rescue plan proposed in September and another $ 37.8 billion bailout last month by the amount does not stabilize AIG. The insurance giant's global employees exapaq up to 100,000 people, involving numerous commercial and financial areas of global exapaq economic exapaq regions.
Treasury is currently considering whether to $ 700 billion bailout plan to expand to provide financing for a wide range of financial institutions in the economy. Treasury expects will focus more on the company to inject, the initial plans to acquire non-performing exapaq loans and mortgage-backed securities and other troubled assets, such as the backseat. Before making these changes, some of the major shareholders of the initial bailout critics in general, because the plan calls for AIG to sell assets quickly in declining markets, but also to pay the high interest loans from the government obtained. At the same time, it can not adequately address the major issues facing this insurer - how to clean up billions of dollars of credit default swaps and other financial instruments, it would like uneasy trading partners collateral. In the framework of the initial bailout in mid-September in support of the Government appointed AIG Chief Executive Edmund (Edward Liddy) is difficult to solve the company's problems.
AIG in early October proposed a more far-reaching plan to sell assets to repay the first loan granted by the Government (the amount exapaq may be as high as $ 85 billion). However, potential buyers market turmoil make it difficult to obtain financing. The revised plan is not only to improve the ability of AIG to sell assets at a reasonable price, but also to help taxpayers recover on AIG capital injection as soon as possible. It also put a lot of risk by AIG prior commitments transferred to the U.S. government, which in the future exapaq may face hundreds of millions exapaq of dollars in losses. Under the new agreement, the government will cancel the $ 85 billion originally proposed biennial loans, substituting a five-year, exapaq $ 60 billion in loans. Interest on the loan will also benefit from 8.5% plus three-month London Interbank Offered Rate (Libor) to 3% plus Libor. In addition, the government will come up with $ 40 billion to buy preferred stock from AIG's $ 700 billion Troubled Asset Relief exapaq Program. These stocks with a 10% annual interest. After these adjustments, the government equity shares in AIG will remain unchanged 79.9%. Government's initial intervention was due to fear that if AIG credit exapaq default swaps (CDS) market defaults, dragged down the global financial system will collapse. (CDS are bond investors to buy a policy to prevent the occurrence of default risk. AIG insured tens of billions of such agreements.)
According to the revised agreement, AIG will issue the assets included two independent institutions. Among them, the first institution from the government and AIG were given $ 30 billion and $ 5 billion of capital, the money will be used for the acquisition of AIG agreed to CDS contracts covered a total face value of $ 70 billion is called "CDOs "(CDO) exapaq of the underlying securities. Such securities include loan funds, trading was light. The agency will seek partners from CDS contracts where half the nominal value of the acquisition price of these securities. Such securities are not the AIG credit default swaps exposure all, but they and the biggest exapaq problem assets. Government may believe that it will encourage AIG trading partners exapaq involved in the sale of securities and CDS agreement to the new agency. Once the holder of these securities, AIG could cancel the CDS, get it before the contract provides for the collateral. Currently the total value of collateral of about $ 30 billion. This may also have unintended consequences for the market. To make this program up and running, AIG's exapaq trading partners (that is, banks and other financial institutions as a CDS contract counterparties) may have to agree to any modification of the terms of the agreement with AIG made. However, agreement on this matter may not be easy. AIG credit default swaps some of the opponents body does not actually hold these kind of securities, although they purchase insurance for these securities. The second mechanism is set up to solve the AIG securities lending liquidity problems. This business through the short side or the other investors in securities lending and investment pledge to make a profit. AIG has been trying to sell illiquid assets in order to also back the collateral it had received. AIG securities lending market exposure in its fight to force the government to obtain loans from $ 37.8 billion to meet its obligations.
Under the new plan, the government will this margin is expected to inject about institutions $ 20 billion, AIG will provide an additional $ 1 billion. The agency then half the nominal value of the purchase price will be held by AIG illiquid mortgage-backed securities. AIG will use the proceeds of the sale to terminate the $ 37.8 billion exapaq lending exapaq program. It is currently undrawn amount of all of the plan. After a period of time, there may be two cases. First, the assets exapaq held by the two new bodies may rebound in value, the government on these investments will be profitable last. The opposite situation is that these are mostly related to the assets and the housing market is likely exapaq to continue to depreciate, so taxpayers will therefore suffer significant losses.
AIG still faces enormous challenges. Given the many uncertainties in the future, it is trying to fight to retain good employees a number of key corporate customers and operations departments. When the U.S. government announced the details exapaq of the plan of adjustment, AIG also announced its third quarter results. Net loss of $ 24.47 billion this insurer's third-quarter, mainly due to huge investment losses and asset write-offs are tired. American International exapaq Group's third quarter net loss of $ 24.47 billion, or a loss per share of $ 9.05; over the same period to achieve net profit of $ 3.09 billion last year, earnings per share of $ 1.19. Excluding capital impairment, $ 9.24 billion quarterly loss, loss per share of $ 3.42. Quarter revenue fell 97 percent, from $ 29.84 billion for the same period last year fell to $ 898 million. American International Group shares closed Monday up 8% to $ 2.28 in intraday trading rose to $ 2.84. Wall Street Journal Chinese network major blood loss ah ~ ~ ~
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