NEW YORK, September 15, 2008 (AFP) – Struggling US insurance giant American International Group was thrown a life-line Monday by New York authorities, who said the company could borrow some 20 billion dollars from its subsidiaries.
New York Governor David Paterson said he had called on regulators “to provide the authorization, such that AIG can access 20 billion dollars of its assets through its subsidaries for the purpose of posting these assets as collateral.”
Paterson assured reporters at a press conference that the company was financially sound but “right now they are having a liquidity problem as they need immediate access to capital.”
The lifeline failed to impress investors though as AIG shares plunged some 61 percent on the stock market on Monday, losing some 20 billion dollars in market value. In just a year, the group has lost 93 percent of its value and is only worth some 12.8 billion dollars.
It has primarily been shaken by fears that it could be the next domino to fall in the worst banking crisis to shake Wall Street since the Great Depression.
AIG, saddled with toxic mortgage-backed derivatives and facing the imminent threat of a ratings downgrade, has reportedly turned to the US Federal Reserv