Greenberg calls for changes in AIG bailout

Oct. 14, 2008 at 11:34 AM   |   0 comments

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NEW YORK, Oct. 14 (UPI) -- Maurice Greenberg, former chief executive officer of American International Group, has called for changes in the company's U.S. federal bailout package.

The current plan, which started with a two-year $85 billion line of credit, calls for AIG to pay a 2 percent commitment fee, 8.5 percent on unused capital and a floating interest rate, currently 14 percent, on credit used, The Wall Street Journal reported Tuesday.

The government received 79.9 percent stake in the company and interest payments that currently add up to $1 billion monthly, the Journal reported.

In a letter filed with the Securities and Exchange Commission, Greenberg called for the government to switch the terms from a loan to nonvoting stock with dividends between 5 percent and 6 percent and a 10-year right of redemption at a 10 percent premium, the Journal said.

"At a minimum, AIG should be afforded the same borrowing terms as other companies," Greenberg's letter said. "Since the time the credit facility was entered into, the Federal Reserve has stepped up direct lending to scores of financial institutions and, for the first time last week, to nonfinancial institutions."

"They are able to borrow on terms far less onerous than those imposed on AIG," Greenberg wrote.

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