AIG - Securities Lending - International
2010 01 - BIS / The Joint Forum - Review of the Differentiated Nature and Scope of Financial Regulation Key Issues and Recommendations - 128p
Another issue AIG had to face came from its securities lending programme.
- AIG‟s insurance undertakings essentially lent securities via this programme to other financial institutions outside the AIG group in exchange for cash collateral.
- This money was then used by AIG Investments for investments in RMBS and other debt obligations.
- News on the weakening state of AIG caused increasing numbers of lenders to return the securities and to regain their money from AIG.
- This caused further liquidity difficulties for AIG.
→ Both activities <AIGSL-Securities Lending and AIGFP-Credit Default Swaps> contributed to a strong need for additional liquidity at AIG in September 2008.