In a Nutshell

AIG has the capability to bail itself out by selling profitable assets/subsidiaries.

AIG requires bridge loan of USD40b from the Federal Reserve in the interim.

Fed Reserve pressures authorities to allow AIG to borrow USD20b from its subsidiaries instead.

Quick pull on the trigger by credit rating agencies results in AIG having to post a huge amount of collateral.

Fed Reserve discourages AIG from seeking its assistance – tasks JP Morgan and Morgan Stanley to put together USD75-80b for AIG.

If AIG fails, it will bring down the US financial market with it as too many banks, financial institutions have exposures on AIG. 

Fed Reserve is forced into emergency meeting to consider helping AIG.

Maurice Greenberg, AIG’s former CEO who was ousted in 2005, still owns 11% of AIG and is currently leading a group of investors to take control of AIG through a proxy fight or buyout.

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Singapore will be waking up to exciting times tomorrow!

2 Responses to “In a Nutshell”


  1. 1 Keong

    Wondered who else will follow soon =(

    really not good for world economy.

    http://mykeong.blogspot.com/2008/09/how-deep-can-it-goes.html

  2. 2 UptownGal

    This is just the cyclical nature of the economy I guess. It’s been booming for the past 3-4 years so a downturn is not unexpected.


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