Credit Crunch

New Deal for Faltering Insurer

Late Sunday night the Treasury finalized a new $150 billion rescue deal for AIG, replacing the original $85 billion agreement put in place in September, topped up weeks later with a further $37.8 billion. The aid amounts to a $60 billion loan, a $40 billion preferred-stock investment, and $50 billion in capital largely to purchase distressed assets. “The revised structure is designed to improve both AIG's ability to sell assets for a decent price and the taxpayers’ ability to recoup the money that has been pumped into the insurer,” reports the Wall Street Journal. This third rescue deal “could also spark a political backlash, especially from congressional Democrats,” warns the paper, “because the Treasury … has thus far refused to extend a hand to the struggling Big Three auto makers.”