American International Group Inc. says it is negotiating for more government help, and CNBC says AIG is about to report a $60 billion loss.
AIG, New York, has not yet reported results for the fourth quarter of 2008, AIG spokesman Peter Tulupman says.
“We continue to work with the Federal Reserve Bank of New York to evaluate potential new alternatives for addressing AIG’s financial challenges,” Tulupman says. “We will provide a complete update when we report financial results in the near future.”
CNBC is reporting that AIG’s board is scheduled to meet Sunday in hopes of hammering out an agreement with the government.
The talks hinge on how the government can swap debt for AIG equity without violating rules that cap the government’s equity stake in AIG at 79.9%, CNBC is reporting.
If AIG cannot negotiate an agreement, company lawyers are preparing for the possibility of a bankruptcy filing, CNBC says.
AIG will need more cash because it is likely to report a loss of up to $60 billion, due largely to writedowns on commercial real estate and other assets, CNBC says.
The Treasury Department did not immediately respond to requests for comment.
A spokesman for Rep. Barney Frank, D-Mass., chairman of the House Financial Services Committee, says, “The Federal Reserve handled all interventions with AIG. The Federal Reserve will recommend when, and if, Congress needs to be involved.”
A spokesman for the Federal Reserve Board says the Fed will look into the issue.
The Treasury and the New York Fed have provided about $150 billion in assistance to AIG since Sept. 17, 2008.
The New York State Insurance Department takes the lead in regulating AIG’s main insurance company subsidiaries.
David Neustadt, a spokesman for the New York department, said that, as far as he knew, the department had not been informed of the possibility of a $60 billion loss.
If it did know about such a less, “it would be inappropriate to comment” before any official announcement, Neustadt said.
Additional information was contributed to this report by Jim Connolly.