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TheStreet Open House

AIG Paid Big Banks With Bailout Money

Stocks in this article: AIG BCS DB

Updated from Sunday, March 15 NEW YORK -- American International Group (AIG) detailed how it used some of its $170 billion in federal bailout money, after the troubled insurer provoked outrage on Capitol Hill over its payment of tens of millions in executive bonuses.

Lawmakers on Capitol Hill have demanded that the identities of banks and other so-called counterparties that do business with bailed-out institutions be made public.

AIG said it used its $85 billion emergency loan from the Federal Reserve Bank of New York in September and other rescue funds primarily to put up collateral for big foreign and domestic banks, including those which have received billions in government bailout money themselves, and to help meet securities lending obligations to banks.

AIG said that between the time it received the loan on Sept. 18, 2008 and the end of the year, the company's securities lending arm used $43.7 billion in public aid to meet obligations to banks, including $7 billion paid out to Britain's Barclays (BCS), $6.4 billion to Germany's Deutsche Bank (DB) and $4.5 billion to Bank of America (BAC).

Other banks receiving between $1 billion and $3 billion from AIG's securities lending unit include Citigroup (C), Merrill Lynch, Switzerland's UBS (UBS) and Morgan Stanley (MS).

AIG said it also put up about $22.4 billion in collateral for banks to meet obligations related to risky credit default swaps -- including $4.1 billion put up for French bank Societe Generale, $2.6 billion for Deutsche Bank, $2.5 billion for Goldman Sachs (GS), and $1.8 billion for Merrill Lynch, among others.

And $27.1 billion in payments made by Maiden Lane III, the unit AIG formed to buy securities underlying risky credit default swap contracts, included $6.9 billion to Societe Generale, $5.6 billion to Goldman Sachs and $3.1 billion to Merrill Lynch.

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