AIG signs up for $85 billion Fed loan (effectively "nationalized")

[UpInArms]

Source: CBS Marketwatch

SAN FRANCISCO (MarketWatch) -- American International Group shares fell more than 10% on Wednesday after the giant insurer agreed to be effectively nationalized late Tuesday.

AIG (AIG: 4.36, -0.64, -12.8%) narrowly avoided bankruptcy last week after the
Federal Reserve stepped in with a massive bailout. See full story.

Some big AIG shareholders have reportedly been trying to raise capital in private markets to avoid the government seizing control of the company.

But late Tuesday AIG said it signed a definitive agreement with the Federal Reserve Bank of New York for a two-year, $85 billion revolving credit facility.

As part of the deal, AIG will issue a series of Convertible Participating Serial Preferred Stock to a trust that will hold the new securities for the benefit of the Treasury. The Preferred Stock will get almost 80% of any dividends paid on AIG's common stock and will give the government almost 80% of the voting power. The securities will then be converted to common stock at a special shareholder meeting, AIG said.

The agreement leaves "AIG essentially nationalized," Bijan Moazami, an analyst at Friedman, Billings, Ramsey, wrote in a note to investors on Wednesday. "Shareholder efforts to prevent the government from taking an equity stake in AIG will prove fruitless."

Read more: http://www.marketwatch.com/news/story/aig-nationalized-insurer-signs-up/story.aspx?guid=%7B51AE069E%2D365E%2D4CFF%2D85FF%2DCC8140D0DBE1%7D&dist=hplatest

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some history:


AIG ex-boss avoids criminal case

The New York authorities investigating financial irregularities at insurance giant AIG have dropped criminal charges against former boss Maurice Greenberg.

Attorney General Eliot Spitzer had brought a lawsuit accusing Mr Greenberg of manipulating the firm's finances to boost its share price.

He has now decided to pursue the action in a civil case.

Mr Greenberg led AIG for 38 years, but stood down in March following investigations into some of its deals.

He has previously refused to answer questions from regulators, invoking rights under US law which protect people from self-incrimination.

In May, AIG admitted that it had overstated its net profit for the five years to 2004 by 10%, or $3.9bn (£2.3bn).

[bluestateguy]

1. George W. Bush: Right Wing Socialist

nt

[CountAllVotes]

2. these fraudulent criminals deserve nothing!

but jail for life!!!! :mad:

:kick:

[dweller]

3. they were also dropped from the DowJones as of today

hopefully the FBI can continue to monitor them as nec. for the investigation.

dp

[yurbud]

4. we better get something back

[David__77]

5. I would like the whole finance sector nationalized.

Finance capital in private hands inevitably causes disasters.