AIG Said to Accept Federal Takeover, Replace Managers (Update1)
By Hugh Son
Sept. 16 (Bloomberg) -- American International Group Inc., the biggest U.S. insurer by assets, has accepted a deal to turn over control in exchange for an $85 billion loan from the Federal Reserve, a person familiar with the situation said.
AIG will replace management as part of the deal, said the person, who declined to be named because no public announcement has been made. AIG spokesman Peter Tulupman had no immediate comment.
The agreement would keep New York-based AIG in business, averting a collapse that could have threatened more financial companies and caused $180 billion in losses, according to RBC Capital Markets. AIG needed the loan to stave off a collapse after its credit ratings were cut and shares plunged 79 percent since Sept. 11.
The federal lifeline will allow AIG to sell assets in an orderly fashion, the person said. Proceeds from the divestments may be used to help pay back the two-year loan, the person said.
``The alternatives are much worse,'' said U.S. Senator Charles Schumer, Democrat of New York, in a statement after lawmakers met with U.S. regulators.
To contact the reporter on this story: Hugh Son in New York at hson1@bloomberg.net
Last Updated: September 16, 2008 21:01 EDT |
