AIG Real Estate Deals May Impact Banks

AIG has slashed or delayed payments to partners in some of its real-estate ventures, potentially hurting several banks and developers.
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American International Group

(AIG) - Get Report

has slashed or delayed payments to partners in some of its real-estate ventures, potentially hurting several banks and developers, according to a news report.

One deal concerning shopping center developer Alex Baker may put 15 banks at risk of exposure to bad debt, according to the

Wall Street Journal

. Affiliates of another developer, Mitchell L. Morgan Management, sued AIG in February, alleging that the insurer fell behind on payments.

AIG Global Real Estate has over $23 billion worth of ventures, according to the paper, creating a similar situation -- on a smaller scale -- to the

counterparty risk

that led the government to step in and shore up the struggling insurance giant with $180 billion in public funds.