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Sep 16, 2008 12:18 pm US/Eastern
Pressures Mount On AIG, As World Awaits Outcome
Officials Try To Stem Crisis; Possible $75 Billion Bridge Loan From JP Morgan Chase, Goldman Sachs
Gov. Paterson Clears Way For $20 Billion, But Loan Won't Be Enough
Reporting
Jay Dow
NEW YORK (CBS) ―
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Is AIG next? That's the worrisome question lurking its way through the financial world Tuesday morning, as the nation's largest commercial insurer, trying not to follow bankrupt Lehman Brothers into insolvency, faces the ultimate crisis. (File)
Chris Hondros/Getty Images
Is AIG next? That's the worrisome question lurking its way through the financial world Tuesday morning, as the nation's largest commercial insurer, trying not to follow bankrupt Lehman Brothers into insolvency, faces the ultimate crisis, a fight for its survival.
Another American Institution is on the brink of bankruptcy. And if the New York-based insurance giant AIG is to avoid a Lehman Brother like demise, it must secure a credit line worth tens of billions of dollars.
There's also nothing funny about AIG's credit rating, which suffered a damaging downgrade overnight.
The situation is dire enough that Governor David Paterson is clearing the way for AIG to borrow $20 billion from its own life insurance based subsidiaries - to pay for day to day operations.
"I'm very depressed. I don't know how to pay my rent next month if anything goes bad. I'm worried," said AIG employee Astrid Mkhitarian.
But the $20 billion transfer clearly won't be enough, so federal officials have asked two healthy firms - JP Morgan Chase and Goldman Sachs - to arrange a $75 billion bridge loan to keep AIG afloat during the difficult weeks ahead.
Employees say AIG's immense size will certainly be an ally in its fight for survival.
But there's concern the world's largest insurer could be broken up if it does make it through this ordeal.
"I used to kid. I said, if AIG went - fell - that would be a harbinger...the end…for the whole society, because it was a bedrock," said an unidentified AIG employee.
"We're going to make it. The company may look differently than it has in years past - but we will pull through," said employee David Leiser.
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