AIG is supposed to be selling operations to pay the government back. Nothing has been announced yet. Given the turmoil in the insurance industry, it is unquestionably a bad time to sell any insurance operations.
One of the measures that is not talked about in the press much is the Federal Reserve buying corporate commercial paper pursuant to its new Commercial Paper Funding Facility (CPFF). Guess who is participating in that program? I noticed this filing with the SEC from International Lease Finance, a wholly owned subsidiary of AIG, that contains the following eye opener:
" On October 27, 2008, International Lease Finance Corporation (the “Company”) was approved to participate in the Federal Reserve Bank of New York’s Commercial Paper Funding Facility (the “CPFF”) to issue up to $5.7 billion of commercial paper. As of October 30, 2008, the Company has issued approximately $1.7 billion, which proceeds were used to repay certain intercompany loans from the Company’s parent, American International Group, Inc. The commercial paper will be due January 28, 2009 and the Company will pay a lending rate of 2.78%. The Company expects to refinance the commercial paper when it matures, subject to the terms and conditions of the CPFF."e8vk
I had expected International Lease to have been sold by now. It is heavily in debt but profitable.
I am not trying to cast aspersions here. It may very well be that a collapse of AIG would have triggered a Financial Armageddon. I would also say without equivocation that I would not trust any of these people to do what is in the nation's interest as opposed to their own personal self-interest. This needs to be fully investigated during the first session of the next Congress.