Federal Reserve Board, with full support of the Treasury Department, authorizes the Federal Reserve Bank of New York to lend up to $85 billion to the American International Group (AIG) (September 16, 2008)

Claims Supported by This Source

1. On September 16, 2008, under Section 13(3) of the Federal Reserve Act, authorized the Federal Reserve Bank of New York to lend up to $85 billion to AIG, with the full support of the Treasury.
2. The Board's judgment: A disorderly failure of AIG could add to already significant financial market fragility, leading to higher borrowing costs, reduced household wealth, and a weaker economy.
3. Terms: 24-month term, interest rate of 3-month LIBOR + 850 bp, collateralized by all assets of AIG and its primary non-regulated subsidiaries, repaid with proceeds from asset sales. The U.S. government would receive a 79.9% equity interest and the right to veto dividends.

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