American International Group Inc. Chairman Edward Liddy is warning that AIG may need more than the $123 billion in government financing it already has to keep going while it restructures.
Liddy made the comments earlier this week during an interview on PBS.
AIG, New York, has obtained an $85 billion emergency credit line from the Federal Reserve Bank of New York and another $38 billion in government financing backed by securities owned by AIG’s life insurance units.
AIG needs the cash because AIG Financial Products Corp., London, the company’s shuttered derivatives unit, continues to face demands to post additional collateral, to back the credit default swaps it sold, Liddy says.
Normally, AIG would be selling commercial paper to raise cash, Liddy said.
AIG arranged the extra $38 billion in financing through a securities repo “because there’s no commercial paper around right now,” Liddy said.
If the credit markets continue to decline, “and we have to keep posting collateral, as it’s called in the vernacular in the industry, it’s possible it may not be enough,” Liddy said.