Morning:
11°c
Fed's bailout for AIG rises to £96 billion
10.11.08
Ailing AIG is to receive an increased $150 billion (£96 billion) bailout package from the US Federal Reserve in a sign that the insurance giant needs far more help than previously announced.
The Fed is splashing out $40 billion on preference shares in AIG, $22.5 billion to buy up some of the insurer's toxic mortgage-backed securities and $30 billion to cover credit default swap agreements. The US central bank also announced strict new rules on bonuses for AIG staff.
It is tapping the $700 billion Congress-approved Government fund to buy the AIG shares .
The new deal allows the Fed to slash the credit facility it is offering AIG to $60 billion from the original $85 billion bailout in September. It also cutting the interest rate on loans to the insurance firm to 3.5% above Libor, from 8.5% above previously.
AIG today announced a $24.47 billion loss in the third quarter of 2008.
