American International Group, Inc. has given into pressure to disclose the identity of counterparties that received taxpayer funds as a result of its bailout.

The firm said that after consultation with the Federal Reserve about the potential public benefit of counterparty disclosure and the potential that such disclosure would cause competitive harm to AIG or its counterparties, it has decided to go ahead and disclose the information.

Using funds from an emergency loan granted last September, financial counterparties received a total of US$22.4 billion in collateral relating to credit default swap transactions from AIG’s financial products division between Sept.16, 2008 and Dec. 31, 2008. Societe Generale was the biggest recipient of these funds, US$4.1 billion; followed by Deutsche Bank at US$2.6 billion; Goldman Sachs at US$2.5 billion; and, Merrill Lynch with US$1.8 billion. Bank of Montreal was also on the list at US$200 million.

On Nov. 10, 2008, AIG and the New York Fed established Maiden Lane III, a financing entity, to purchase the securities underlying certain CDS contracts from the counterparties to such contracts, allowing the cancellation of the contracts. Payments made by Maiden Lane III to such counterparties, included US$6.9 billion to Societe Generale, US$5.6 billion to Goldman Sachs, and US$3.1 billion to Merrill Lynch. BMO was the only Canadian institution on the list, it received US$900 million.

Municipalities also received a total of US$12.1 billion from AIGFP between Sept. 16, 2008 and Dec. 31, 2008 in satisfaction of Guaranteed Investment Agreement obligations. And, public aid was also used to satisfy obligations to financial counterparties related to AIG’s securities lending operations. No Canadian firm made this list, which was topped by Barclays at US$7.0 billion; Deutsche Bank with US$6.4 billion; BNP Paribas, US$4.9 billion; and, Goldman Sachs at US$4.8 billion.

AIG has used the balance of the public aid it received during that time period for other purposes, including the funding of Maiden Lane II and III, debt repayment and capital support for some of its businesses.

AIG chairman and CEO, Edward Liddy, said that the counterparty and collateral information show that billions in government assistance flowed to dozens of financial counterparties and municipalities during a time of acute stress in the economy. Liddy emphasized that AIG’s disclosure of the counterparties does not change AIG’s commitment to maintaining the confidentiality of its business transactions. “Our decision to disclose these transactions was made following conversations with the counterparties and the recognition of the extraordinary nature of these transactions,” Liddy said.

IE