AIG Pays Down a Few Bucks on Its Fed Credit Line
Wow, if they keep up this pace they'll easily repay that $183 billion we gave them in no time!
American International Group Inc. reduced the debt it owes on a Federal Reserve credit line by about $3.5 billion in the last three months, signaling an improvement in liquidity at the bailed-out insurer.
AIG owed $23.4 billion as of July 28, down from about $27 billion at the end of April, according to Fed data. The draw has declined for 10 of the past 12 weeks, the first time that has happened since the facility was established in 2008 as part of New York-based AIG’s first rescue.
“The fact that this number is coming down is a positive indication that the solvency of the insurance entities is on the mend,” said David Havens, managing director at Nomura Securities International Inc. in New York. “Assuming the funds repaying the Fed line are coming from the insurers, that’s a strong signal that their balance sheets have been repaired.”
You know what they say about assuming...
Supposedly AIG is considering giving up its $6 billion stake in its own crap assets that are now basically Fed property (Maiden Lane II and III) in the hopes that the sale might help them pay back some of the money they owe from, well, needing the Fed to bail them out and take them in the first place. Totally logical. After they figure that part out, maybe the Treasury will see some of the $49 billion it floated AIG.
Let's not forget the Fed is expecting interest.
Most of AIG's payback cash has come from divesting foreign operations - at some point, it's obviously going to run out of subsidiaries to sell off. But at that point I'm sure AIG will be making the $8 billion a year required to pay back bailout funds. Suuuuuure.