AIG to cut debt owed to Fed

American International Group, or AIG, aims to cut the debt it owes to the New York Fed through the IPOs of its Asian life insurance units as well as the handing over of some of its bonds worth up to $8.5bn.  So far the insurance giant, 80% owned by the government, owes $43bn to the New York Fed, while the Treasury has invested $40bn.  From the $173bn made available to rescue the firm, $127bn has been used up (if the $44 billion the Fed pumped into two entities that bought up toxic AIG assets were also to be considered).

The firm has reached a deal with the NY Fed to take in a $25bn worth of stake in two of its foreign life insurance units.

From WSJ:

As for the New York Fed debt, the $25 billion deal struck Thursday, which AIG and the Fed had basically committed to in March, will cut it to about $18 billion. The deal involves foreign life-insurance units that are moving toward public offerings starting next year, and the Fed will get the first dollars from those sales. But it could take months or years of selling off shares on the open market before the Fed gets fully paid for its investment.

Read more HERE.

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