AIG To Tap NY Fed For $38b On Top Of $85b They Already Got

Four days ago, AIG had used $61b of it’s $85b Fed loan to meet cash needs in the short term and buy time for them to sell off some divisions of the company to raise longer-term money and regain some stability. Today, the New York Fed allowed AIG to tap $37.8b for additional short-term liquidity:

AIG can swap as much as $37.8 billion of its “investment-grade, fixed-income securities” for cash to “replenish liquidity” at the New York-based insurer, the Fed said late yesterday in a statement. AIG spokesman Nicholas Ashooh said the assets were held mainly in U.S. life insurance subsidiaries and declined to say how much of the new program has been used.

The short-term cash crunch at AIG has a lot to do with settling credit default swaps that tipped off when Lehman Brothers went down, and their problems have been exasperated by the global shortage of short-term lending.