Fed may reduce AIG's credit line by $3.6 bln - Bloomberg

Mon Aug 23, 2010 12:52am EDT

Aug 23 (Reuters) - The Federal Reserve plans to reduce AIG's (AIG.N) credit line by about $3.6 billion, in a sign of growing confidence that the government bailed-out insurer can emerge out of taxpayer support, Bloomberg said, citing a person with knowledge of the proposal.

As per the terms of American International Group's (AIG) 2008 government rescue, the amount of credit available to the insurer would reduce as it repaid borrowed amounts, the agency said.

The Fed gave an exemption in 2009 to AIG on $3.6 billion in proceeds from asset sales and has decided this year that the relief may no longer be necessary, the person told the agency.

AIG owed $23.5 billion on the credit line as of Aug. 18, compared with about $27 billion at the end of April, according to Fed data, the agency said.

Mark Herr, an AIG spokesman, and Deborah Kilroe of the Federal Reserve Bank of New York declined to comment to Bloomberg.

Both AIG and Federal Reserve could not immediately be reached for comment by Reuters outside regular U.S. business hours. (Reporting by Sakthi Prasad in Bangalore; Editing by Muralikumar Anantharaman)

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