By , AIG had taken down everything $62 billion of your own rotating borrowing from the bank studio

To your , the fresh new FRBNY, AIG, and also the Treasury entered to your an agreement the theory is that to own an excellent selection of integrated deals so you’re able to recapitalize AIG, like the repayment of all amounts due into FRBNY less than the newest revolving credit studio. Throughout the meantime, among AIG’s subsidiaries, Western Insurance Team (ALICO), is ended up selling so you can an authorized, and another subsidiary, Western Internationally Warranty Company Ltd. (AIA), effortlessly accomplished a first public giving (IPO). Initial dollars continues ones transactions more than $twenty six million take put in the segregated account at the FRBNY pending the fresh consummation of your own recapitalization plan. The parties are persisted working toward decisive documentation to make usage of this new agreement in theory.

As expected, such drawdowns was actually used, partly, to repay transactions that have counterparties going back ties that had been lent regarding AIG in return for bucks. From inside the light of your assumption you to definitely even more ties borrowing from the bank counterparties create pick not to replenish the ties borrowing from the bank positions with AIG, additionally the continuing fragile standing of your monetary , the fresh FRBNY was registered to give borrowing from the bank to particular AIG subsidiaries in return for a selection of securities. Lower than this choice, the fresh FRBNY you are going to acquire to $37.8 mil inside the financing-degrees, fixed-income ties of AIG in return for dollars guarantee. This program greet AIG so you’re able to replenish their liquidity, plus the ties offered given that collateral to protect brand new FRBNY.

The fresh new rotating borrowing from the bank facility is actually created underneath the authority of Area 13(3) of Federal Set-aside Act, and this enabled the fresh new Panel, in the uncommon and you can exigent things, in order to approve Set-aside Banks to give borrowing to prospects, partnerships, and agencies

This new ties borrowing facility to own AIG try discontinued following the facilities of your Maiden Way II studio, that is talked about when you look at the greater detail lower than. Most of the ties had been gone back to AIG as well as dollars equity try gone back to FRBNY. Within the restructuring announced on the , brand new FRBNY created Maiden Way II LLC, while the proceeds from this new business of the LLC were utilized to repay completely this new bonds credit arrangement and you may cancel that program.

The fresh new ties credit studio was oriented in power of Area 13(3) of your own Government Set-aside Operate, and therefore allowed the fresh Panel, when you look at the strange and you will exigent things, so you’re able to approve Set aside Banking institutions to extend borrowing from the bank to people, partnerships, and you will providers.

The mortgage stretched by the FRBNY are collateralized by resource portfolio

On , new Government Reserve as well as the Treasury announced a great restructuring of your own government’s capital to AIG. Included in that it reorganizing, two the newest limited liability organizations (LLCs), Maiden Way II LLC and you may Maiden Way III LLC, are manufactured. Into the , the FRBNY began stretching credit so you’re able to Maiden Way II LLC, which had been shaped to purchase residential mortgage-recognized security (RMBS) assets off AIG subsidiaries. Specifics installment loan Utah of new regards to the borrowed funds are penned towards FRBNY website . Maiden Lane II LLC are financed with good $19.5 million senior financing from the FRBNY and you will $step 1 mil out-of AIG due to good contingent purchase price adjustment. The proceeds from the newest property held because of the Maiden Lane II LLC are used to pay-off the borrowed funds towards the FRBNY, also accrued attract. The mortgage have a reported half dozen-season label which is often lengthened on discernment of your FRBNY. The mortgage is interested speed of one’s one-day Libor as well as 100 foundation affairs. According to the terms of the deal, proceeds from the fresh portfolio is actually paid throughout the pursuing the purchase: functioning expenditures regarding Maiden Way II LLC, dominating toward FRBNY, desire as a result of the FRBNY, and deferred fee and you may focus on account of AIG. Any left fund was shared by the FRBNY and you can AIG, having 5/six visiting the FRBNY.