AIG uses proceeds of Fed scheme to pay down government loan

NEW YORK Thu Nov 6, 2008 5:28pm EST

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NEW YORK (Reuters) - American International Group Inc (AIG.N), the insurer saved from bankruptcy by a federal bailout, has reduced the amount it owes the U.S. government for the second week in a row, according to Federal Reserve figures.

AIG currently owes $81.2 billion under two emergency facilities from the Fed, which were necessary to prevent the company from filing for bankruptcy in September. That figure was $83.5 billion a week ago.

An AIG spokesman said the insurer reduced total borrowings by making a voluntary payment with proceeds from a federal commercial paper funding facility.

The total owed under an $85 billion credit facility stood at $61.3 billion as of November 5, including interest and fees.

AIG companies also borrowed $19.9 billion under a subsequent $37.8 billion securities lending agreement agreed last month.

In all, the government has put about $123 billion at AIG's disposal.

Also, four AIG affiliates last month applied to borrow up to $21 billion from the Fed under a commercial paper funding facility that was recently launched.

(Reporting by Lilla Zuill; editing by Jeffrey Benkoe)

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