Governor Paterson relaxed regulations today in order to allow New York–based insurance giant AIG permission to access as much as $20 billion in capital from its subsidiary companies in order to conduct its day-to-day operations. (Yesterday, the insurance giant added to an already tumultuous weekend by asking the Federal Reserve bank for $40 billion, citing a liquidity crisis.) In explaining his decision, Paterson reasoned that should the company fail, thousands of New York jobs would be lost (6,000 in Manhattan, 8,600 statewide). But it was not, he said, “a government bailout,” because the state is not going to provide the money, it’s just going to give them a chance to fix it on their own, i.e. not fuck it up. Not like last time. Because if they do, then the subsidiary companies will have less money and then they’ll have to borrow from the state and — but we’re probably silly to worry. Since, as the governor said, AIG is “extraordinarily solvent.” (Then why are they asking to borrow $40 billion? Unclear.) And anyway, the announcement seems to have somewhat staunched the bleeding, because shares in AIG have stopped totally plummeting and are now just down around 57 percent. So. Let’s hope this works. [Dealbook/NYT, WSJ, Newsday]
