It looks like the original bailout plan for AIG wasn’t good enough:
The federal government will invest $40 billion directly into American International Group as part of an expanded bailout plan announced early this morning as the insurance giant disclosed massive losses over the last three months.
The new $150 billion effort to prop up AIG was crafted after officials recognized that an original bid to help the company was in fact weighing it down the insurance giant by requiring quick repayment and a high interest rate on government loans.’
Federal officials announced the new AIG bailout at 6 a.m. — shortly before the company reported that it had lost $24.5 billion from July through October. AIG has now posted losses of $37.6 billion for the first nine months of the year.
In a conference call with reporters this morning, Treasury officials explained that AIG needed time and more capital to weather a financial storm that had threatened to bring it down. Federal officials say the insurance giant, a company with global sweep, must not be allowed to fail because it is so deeply entwined in the U.S. economy and financial system.
(…)
The enhanced bailout plan — nearly double the original $85 billion loan extended to the company in September — comes with restrictions on how much AIG corporate executives get paid. The top 5 executives at the company are now subject to salary and bonus limits that are the most stringent the Treasury has yet struck in any financial bailout plan. The next 70 highest corporate officials are subject to the same limits on severance packages as other executives of companies participating in the $750 billion Troubled Asset Relief Program. AIG’s overall bonus pool is frozen at 2006-2007 levels.
Because, you know, it’s part of government’s function to dictate executive compensation packages.
