Source:
McClatchy * Posted on Wednesday, March 18, 2009
Forget the bonuses, AIG can't repay its loans, GAO says
By Kevin G. Hall | McClatchy Newspapers
WASHINGTON — Lost in all the shouting over the $165 million in bonuses paid to executives of disgraced insurer American International Group was this sober message delivered to Congress on Wednesday by a government watchdog: AIG's ability repay its $170 billion in loans from taxpayers has eroded significantly.
Testifying before Congress, Orice Williams, the director of the Government Accountability Office's financial markets division, said that AIG has had only limited success in restructuring itself, despite more than $170 billion in federal aid in four separate bailouts since last September.
"AIG's ability to repay its obligations to the federal government also has been impaired by its deteriorating operations, its inability to sell its assets and by further declines in its assets," said a GAO report that was released with Williams' testimony.
When the Federal Reserve rescued AIG in September with an original $85 billion loan that gave the government a nearly 80 percent equity stake in the company, the intention was to prevent rating agencies from further downgrading AIG.
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