The Federal Reserve Board agreed to save American International Group Inc. partly because AIG had enough assets to secure the $85 billion credit facility the Fed provided.
Federal Reserve Board Chairman Ben Bernanke gave that explanation here today during a speech delivered at the Economic Club of New York, according to a written version of the text posted on the Fed Web site.
Bernanke talked about the reasons that the Fed has agreed to rescue some large financial institutions over the past few weeks and not others.
In addition to providing an emergency credit facility for AIG, the federal government has placed the Federal National Mortgage Association, Washington, and the Federal Home Loan Mortgage Corp., Washington, into conservatorships.
The government let Lehman Brothers Holdings Inc., New York, file for bankruptcy court protection.
The government put Fannie Mae and Freddie Mac into conservatorships because letting them fail outright would have caused “unacceptably large dislocations in the mortgage markets, the financial sector, and the economy as a whole,” Bernanke said, according to the written version of his speech.
Stabilizing Fannie Mae and Freddie Mac has helped lead to lower mortgage rates, Bernanke said.