ANOTHER FINGER IN THE DIKE….A couple of days ago we learned the startling news that AIG has already blown through $61 billion of its $85 billion bailout cash. What to do? Answer: give ’em more money:
The Federal Reserve Board said Wednesday that it would provide up to $37.8 billion to the embattled insurer the American International Group to help it deal with a rapidly dwindling supply of cash.
….A.I.G. said Wednesday that it would use the $37.8 billion from the Fed to improve the liquidity of its securities lending business, which is losing cash rapidly. By stopping that flow, A.I.G. said, it would be able to preserve more of the Fed loan and use that money more effectively to wind down the affairs of A.I.G.’s troubled structured finance division, known as the financial products unit.
“Financial products unit” = credit default swaps, just in case the terminology is a little opaque here. That one unit was basically responsible for bringing down the entire company.