AIG: The insurer’s lifeline swells to more than $150 billion, a record for a private firm.
WASHINGTON — When the government offered an emergency loan to insurer American International Group in September, eyebrows shot up at the $85 billion price tag. Now, it looks like pocket change.
The size of the AIG lifeline swelled Monday to more than $150 billion, a record for a private company, as the insurer announced a $25 billion loss for the third quarter. But Neel Kashkari, the interim head of the broader financial-rescue package, was cool to other companies reaching for a piece of the bailout pie.
The new AIG package includes a $40 billion chunk of the $700 billion financial bailout. It’s the first time money from the big rescue bill has gone to any company other than a bank.
General Motors, Ford and Chrysler, burning through cash and bleeding jobs, are prodding the government for more help. Congressional leaders have urged Treasury Secretary Henry Paulson to get some of the $700 billion to the Big Three.
The automakers, covering all their options, are also pushing to get help as part of a new, multibillion-dollar stimulus package for the economy if Democrats push it through Congress when a lame-duck session convenes next week.
“This morning’s action with AIG was a one-off event necessary for financial stability. It is not the establishment of a new program,” Kashkari said at a financial conference.
Under the new plan, the Fed will provide $60 billion in loans. The Treasury will provide $40 billion to buy up preferred stock.The $40 billion going to AIG will buy preferred shares of company stock, giving taxpayers an ownership stake.
Fannie Mae: Its $29 billion loss may force the mortgage-finance firm to tap into funding
By Alan Zibel
The Associated Press
WASHINGTON — Fannie Mae on Monday posted a $29 billion loss in the third quarter as it took a massive tax-related charge, and said it may have to tap the government’s $100 billion lifeline in the coming months.
The mortgage-finance company, seized by federal regulators more than two months ago, posted a loss of $13 per share for the July-September quarter, mainly because of a $21.4 billion noncash charge to reduce the value of tax assets. That compares with a loss of $1.4 billion, or $1.56 a share, in the year-ago period.
Analysts surveyed by Thomson Reuters had expected a loss of $1.60 per share.
Washington-based Fannie Mae’s net worth — the value of its assets minus the value of its liabilities — fell to $9.4 billion at the end of September, down from $44.1 billion at the end of last year. If that number turns negative, Fannie Mae would be forced to obtain funding from the Treasury Department.
The ultimate bill for taxpayers remains unclear. Jim Vogel, a debt analyst with FTN Financial in Memphis, Tenn., said total aid for Fannie and its sibling company Freddie Mac is unlikely to exceed the $200 billion initially pledged by the government.
Despite worsening housing- market conditions, Fannie Mae is “still setting aside way more for future losses than they’re absorbing today,” Vogel said.
Others aren’t so sure. Barclays Capital analyst Rajiv Setia said the government’s arrangement with Fannie and Freddie “may need to be amended” next year. Many analysts consider Freddie Mac, which is expected to report earnings later this week, to be in worse financial shape.
