AIG already back on the brink, FED hands over another 37.8 billion loan

[e-brake]

WASHINGTON (AP) -- The Federal Reserve has agreed to provide insurance giant American International Group with a loan of up to $37.8 billion, on top of one made to the troubled company last month.
Under the new program, the Federal Reserve Bank of New York will borrow up to $37.8 billion in investment-grade, fixed income securities from AIG in return for cash collateral. These securities were previously lent by AIG's insurance company subsidiaries to third parties.
Last month, the Fed provided an $85 billion loan to the company, which was on the brink of bankruptcy.

http://money.cnn.com/2008/10/08/news...ion=2008100817

[tricky]

We gave the first loan, so now it's too late for us to stop giving them money. Throwing money at the problem.....

[umalak_]

we must not fail! the consequences would be disastrous! quick... to the money press!

[PETA]

Originally Posted by tricky

Throwing money at the problem.....

that's exactly what we're doing

[david austin]

nice little cnn blurb there

try the dj newswires

more meat (reality) less media doom fluff

[e-brake]

Originally Posted by david austin

nice little cnn blurb there

try the dj newswires

more meat (reality) less media doom fluff

What does the DJ newswire have to say about the huge resort conference that AIG is planning for next week? CNN says that the executives are going to have another Executive Retreat in two weeks so that they can decide how much of the bailout money should be spent on a PR campaign for television ads to convince the American tax payers that the loans were all worth it.

[david austin]

its says just that.

there are also about three stories discussing the good initial response for unloading its air services division

here are the actual details

=DJ 2nd UPDATE: Fed Gives AIG More Access To Cash >AIG


WASHINGTON (Dow Jones)--The U.S. Federal Reserve announced a new measure Wednesday to allow troubled insurer American International Group Inc. (AIG) more access to cash.
Technically, the Fed authorized its New York branch to borrow up to $37.8 billion in investment-grade securities from regulated units of AIG in exchange for cash collateral. Other parties have been pulling out of similar transactions with AIG, forcing the insurer to turn over cash. The Fed said its new program will allow AIG to replenish its cash reserves.
The move comes after AIG said it has already drawn down $61 billion of an $85 billion line of credit provided by the Federal Reserve to keep the insurer afloat. Some of that cash has been used to settle transactions with counterparties returning borrowed securities. As of Monday, AIG had about $37.2 billion in securities in the lending program.
The Fed said in a statement the move also will provide "enhanced credit protection to the New York Fed and U.S. taxpayers in the form of a security interest in these securities."
-Dow Jones Newswires

[david austin]

heres the air service story if you want to read it

=DJ AIG Sale Of Aircraft-Lease Giant ILFC Expected To Fare Well


By Ann Keeton
Of DOW JONES NEWSWIRES

International Lease Finance Corp., the industry-leading aircraft leasing business put up for sale by parent American International Group Inc. (AIG), appears to have a bright future thanks to the long-term outlook for global air travel and the value of its portfolio of aircraft.
But potential buyers must look beyond the current credit market meltdown and near-term weakness in air traffic, as airlines cut capacity to address high fuel costs and softening economic conditions.
AIG, under the gun to raise money to pay back the U.S. government for close to $125 billion in rescue assistance, confirmed last week that ILFC would be among the businesses sold to raise cash.
Moody's credit analyst Mark Wasden said AIG should take its time to find a deal that will reflect a good value for the business. While bullish on ILFC's fundamental operations, Moody's cut ILFC's long-term rating to Baa1 from A3.
"ILFC's rating downgrade was a result of both parent and stand-alone considerations," Moody's said. "The combination of parent-level concerns, credit market volatility and growing economic uncertainty has increased the operating and financial risk at ILFC."
Richard Abulafia, aircraft analyst at Teal Group aerospace consultants, said the aircraft leasing business shouldn't be hard-hit by credit market worries because "it involves a tangible asset that can generate revenue and can be moved to any market that needs it."
As an indirect subsidiary of AIG, ILFC does its own financing and files separate financial statements with the Securities and Exchange Commission. For the second quarter, ILFC reported net income of $214 million, on revenue of $1.3 billion.
Standard & Poor's on Monday raised its rating on ILFC's preferred stock to BBB from B, reversing a lowered rating on Sept. 16. At that time, the Federal Reserve said the government's rescue gave it the right to veto stock dividends at AIG. But, with ILFC up for sale, the ratings agency said the unit will be more attractive to buyers if the preferred dividend remains intact.
S&P analyst Philip Baggaley added that ILFC recently drew down $6.5 billion of bank credit and said he believes it can meet debt obligations into the first quarter of 2009.
With a fleet of about 1,000 aircraft, valued at $55 billion, ILFC is the largest aircraft lessor, as measured by dollar value, although rival GE Commercial Aviation Services, a unit of General Electric Co. (GE) owns more aircraft.
Once sold,ILFC should benefit from the support of new owners.
ILFC's founder and current head, Steven Udvar-Hazy is seen as a likely candidate to put a buying plan together. He founded ILFC 35 years ago, later joining forces with AIG.
Market observers have suggested that the highly respected aerospace executive might put together a consortium of well-heeled buyers, perhaps including foreign sovereign wealth funds or other state-owned concerns in Asia and the Middle East. For political reasons, foreign buyers might shy away from coming forward on their own.
In any case, industry observers say it's key that ILFC's current management stay on board to run the company. "This is an industry that requires a lot of experience. It's not for neophytes," Abulafia said.
As part of AIG, ILFC for years shared in AIG's strong credit rating. Although the leasing company continued to do its own public financing, it could use AIG's financial strength as a backstop. Recently, though, ILFC saw its credit rating decrease along with AIG's, as the giant insurance company fell victim to the U.S. credit crisis.
Lessors in general are highly leveraged because they borrow money to buy new aircraft costing millions of dollars apiece and lease them out to airlines. ILFC's debt/equity ratio is 4 to 1. Under normal business conditions, that might not be a problem for potential buyers, said S&P's Baggaley. But, with the airline industry heading into a global slowdown, the market for leased aircraft could soften.
For a buyer able to ride out the current storm, ILFC could be a good investment. As the biggest customer of Boeing Co. (BA) and Airbus, ILFC has a valuable order book, worth some $17 billion at list prices.
Over the next 20 years, air traffic is expected to grow about 5% annually, on average, as the global economy expands. According to industry projections, that will keep fueling demand for new planes.
The market has been hot for several years, as new airlines around the globe shop for the latest in fuel- efficient technology. At the same time, established airlines are under pressure to replace their older aircraft.
Still, some aircraft pricing has begun to weaken in recent months, as the credit crunch threatens the near-term future of business and leisure travel, and the high cost of fuel caused some airlines to defer aircraft purchasing.
-By Ann Keeton, Dow Jones Newswires; 312-750-4120; ann.keeton@dowjones.com

[umalak_]

so what about them using the money for junkets?

how do you defend that?

[david austin]

you guys are funny

they have the assets... they just need the time to sell them

im not going to defend a company for wanting to treat the high level people who promote sales for the company to grow

theres a certain element of business as usual that you still have to maintain

i dont really feel the need to comb the balance sheets and make sure nobody is stealing a ream of paper from the supply room.

[e-brake]

Originally Posted by david austin

its says just that.

there are also about three stories discussing the good initial response for unloading its air services division

here are the actual details

=DJ 2nd UPDATE: Fed Gives AIG More Access To Cash >AIG


WASHINGTON (Dow Jones)--The U.S. Federal Reserve announced a new measure Wednesday to allow troubled insurer American International Group Inc. (AIG) more access to cash.
Technically, the Fed authorized its New York branch to borrow up to $37.8 billion in investment-grade securities from regulated units of AIG in exchange for cash collateral. Other parties have been pulling out of similar transactions with AIG, forcing the insurer to turn over cash. The Fed said its new program will allow AIG to replenish its cash reserves.
The move comes after AIG said it has already drawn down $61 billion of an $85 billion line of credit provided by the Federal Reserve to keep the insurer afloat. Some of that cash has been used to settle transactions with counterparties returning borrowed securities. As of Monday, AIG had about $37.2 billion in securities in the lending program.
The Fed said in a statement the move also will provide "enhanced credit protection to the New York Fed and U.S. taxpayers in the form of a security interest in these securities."
-Dow Jones Newswires

So what I get out of that is that AIG already spent 61 Billion of its 85 Billion so they didnt have any left to stuff under the mattress to prepare for a depression. So they went back to the FED to borrow another 37.8 Billion so that it looks like they have some cash on hand when the Annual Report gets published.

In the meantime they will be back at the same resorts getting spa treatments and drinking $200 martinis again to decide how much of that 37 billion they need to spend on advertising with each of the major networks to get the media to talk nice about them.

[PETA]

Originally Posted by david austin

there are also about three stories discussing the good initial response for unloading its air services division

Any clue what they got for it?

[umalak_]

Originally Posted by david austin

i dont really feel the need to comb the balance sheets and make sure nobody is stealing a ream of paper from the supply room.

lol @ you comparing their spa trip to stealing a ream of paper

[david austin]

not sold yet

[david austin]

Originally Posted by umalak_

lol @ you comparing their spa trip to stealing a ream of paper

its showing a point that 400k is a relative drop in the bucket... especially since it was a trip for people who sell their product

NOT the board jetting away for a round of golf

their air services division alone will prob sell for around 8 billion