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.
Municipalities in certain states, including California, Virginia and Hawaii, received a total of $12.1 billion under guaranteed investment agreements. The company said it used the rest of its federal aid to fund its Maiden Lane business, repay debt and provide capital for some of its operations. Federal Reserve spokeswoman Michelle Smith said in a statement Sunday that aid to AIG has helped all the counterparties, including individual policyholders, municipalities and pension funds, small businesses with insurance coverage and domestic and international companies and banks. "We commend AIG for finding a balance between its concerns with confidentiality and the concerns of the public interest that may be served through the release of this information," Smith said. "The ability of AIG to meet its obligations is important to the stability of the U.S. financial system and to getting credit flowing to households and businesses." "I've been asking for this information for months. This is a good first step, but I'm concerned by how long it took,' said Rep. Carolyn Maloney, D-N.Y., who is chair of Congress' Joint Economic Committee. "Transparency about the counterparties is essential to having an informed debate and developing solutions to our current economic crisis, as well as to Congress' ability to oversee the use of taxpayers' money." The details from AIG come after the Obama administration and top Republicans voiced sharp criticism over $165 million in bonus payments AIG says it must make Sunday even as it accepts billions in federal aid. The contracts are part of a larger total payout which has been reportedly valued at $450 million.
In a letter to Treasury Secretary Timothy Geithner dated Saturday, AIG Chairman Edward Liddy said outside lawyers informed AIG that it had contractual obligations to make the payments and could face lawsuits if it did not do so. Liddy said the company entered into the bonus agreements in early 2008 before AIG got into severe financial straits and was forced to obtain a government bailout. AIG has agreed to the Obama administration's requests to restrain future payments.