Yale Program on Financial Stability

  • Journal of Financial Crises - [LINK]
    • "...is an online publication of the Yale Program on Financial Stability (YPFS), the mission of which is to create, preserve, and disseminate knowledge about financial crises."
  • 2020 03 - Yale - YPFS - The Rescue of American International Group, Module B: The Securities Borrowing Facility - 18p
    • (p7) - As markets roiled throughout the summer of 2008, AIG’s liquidity problems became
      increasingly clear to securities borrowers (GAO 2011, 19),
    • Three rating agencies downgraded AIG’s credit rating by two to three notches on September 15, 2008, resulting in an additional $20 billion in collateral demands and transaction termination payments (AIG 2009, 4).
    • To improve their own liquidity and reduce exposure to AIG’s credit risk, securities borrowers stepped up their cash demands (McDonald and Paulson 2015, 86-87).
    • On September 15 alone, AIG made payments of $5.2 billion to securities borrowers (AIG 2009, 4).
    • AIG’s lead life insurance regulator testified that securities borrowers demanded a return of about $24 billion between September 12 and 30 (Dinallo 2010, 17).