The Federal Reserve Bank of New York announced the termination of its assistance to American International Group, Inc. (AIG) and the full repayment of its loans to AIG as a result of the closing of the recapitalization that was announced on September 30, 2010. As of today, AIG will no longer have any outstanding obligations to the New York Fed.
Todays closing represents a substantial step toward achieving the Federal Reserves dual goals of stabilizing AIG and ensuring its repayment of government assistance. It reflects the significant progress AIG has made in reducing the scope, risk and complexity of its operations and stabilizing its operating results. The accelerated repayment of the New York Fed frees up collateral that will enable the company to access private debt markets, an essential step toward facilitating the U.S. Department of the Treasurys future sale of the common stock it owns.
“This concludes an important effort by the Federal Reserve to stabilize the financial system in order to protect the U.S. economy” said William C. Dudley, president of the New York Fed.
With todays closing of the recapitalization, the New York Feds revolving credit facility has been fully repaid, including interest and fees, and its commitment to lend any further funds has been terminated ahead of the credit facilitys scheduled expiration in September 2013.
In addition, the New York Fed has been paid in full for its preferred interests in the AIA and ALICO special purpose vehicles. A portion of those interests has been redeemed with proceeds from AIGs sale of ALICO to MetLife, Inc. The remaining interests have been purchased by AIG through a draw on the Treasury Departments Series F preferred stock commitment and transferred to the Treasury Department.
The closing of AIGs recapitalization also marks the termination of the AIG Credit Facility Trust, which was established to hold an approximately 79 percent controlling equity interest in AIG for the sole benefit of the U.S. Treasury, the general fund of the U.S. government. The Trusts equity interest in AIG is being exchanged for common stock of AIG and transferred to the Treasury.
We are grateful to Jill M. Considine, Chester B. Feldberg, Peter A. Langerman and Douglas L. Foshee for their invaluable contributions and commitment to the execution of their responsibilities as Trustees, Mr. Dudley added.
D.C.