- The Washington Times - Tuesday, April 21, 2009

WASHINGTON (AP) - The government has completed the transaction providing nearly $30 billion more in support to American International Group Inc., minus $165 million in bonus payments.

The Treasury Department also announced Tuesday that it has added Bank of America Corp. and Countrywide Home Loans Servicing to its mortgage relief program. That means a total of nine companies are participating in the $75 billion effort.

The department also approved the applications for six more banks to participate in the $700 billion financial rescue program, bringing the total number of banks being helped to 553.

The government has made four separate efforts to save AIG. The Obama administration announced it was providing the latest $30 billion on March 2, a day when the AIG also announced that it had lost $62 billion for the fourth quarter.

In all, including resources put up by the Federal Reserve, AIG has received $182 billion in government support as authorities have struggled to proposition up the giant insurer for fear of what a collapse might do to the already shaky U.S. financial system.

Treasury confirmed in the transaction report released Tuesday that the $30 billion in support announced on March 2 was being trimmed by $165 million. That represented the amount in bonuses AIG initially paid to employees of an AIG unit that sold credit default swaps, the risky contracts that caused massive losses for the insurer. AIG’s announcement of those bonuses last month had caused a political firestorm in Congress.

The Treasury transaction report said that Bank of America had qualified for up to a maximum of $798.9 million in incentive payments, which are designed to encourage mortgage companies to lower borrowers’ monthly bills. Treasury said Countrywide had qualified for up to $1.86 billion. Countrywide, once the largest U.S. mortgage lender, was purchased by Bank of America last year.

The two new selections in the mortgage program bring the total in incentive payments up to a maximum of $13.2 billion.

The announcement on six more banks qualifying for sales of preferred stock to the government brought the total amount awarded in this program to $198.9 billion. The six new banks got a total of $40.9 million with the largest amount, $13.2 million, going to Bank of the Carolinas Corp. of North Carolina.

The transactions covered by the new report were completed last Friday. Under the law that created the $700 billion bailout program, the government has two business days to disclose new transactions.

Sign up for Daily Newsletters

Manage Newsletters

Copyright © 2020 The Washington Times, LLC. Click here for reprint permission.

Please read our comment policy before commenting.


Click to Read More and View Comments

Click to Hide