AIG will shift Federal Reserve Bank debt to preferred shares in two subsidiaries. Bloomberg reported:
The New York Fed will get $16 billion of preferred shares in American International Assurance Co and $9 billion in American Life Insurance Co.No one has been paid back. AIG shifted its capital structure in the subsidiaries. Yet, it's being sold a major move:
The transaction “represents a major step toward repaying taxpayers and preserving the value of AIA and Alico,” Liddy said in the statement.Actually, it's a major step in making the Fed whole, in improving its balance sheet. That's not the taxpayer.
The insurer’s bailout is valued at $182.5 billion, which includes the $60 billion Fed credit line, a $70 billion investment from Treasury and $52.5 billion to fund two vehicles to retire credit-default swaps and the insurer’s securities- lending program.
None of the $25 billion debt shift went toward Treasury or repaying AIG's risky credit bets.
(HT-Economic Policy Journal)