Why was the AIG Credit Facility Trust established?

In September 2008, the Federal Reserve Bank of New York (“FRBNY”), under the authorization of the Board of Governors of the Federal Reserve System and with the support of the Treasury Department, provided an $85 billion credit facility to prevent the imminent collapse of AIG.  As part of that transaction, on September 22, 2008, the FRBNY and AIG entered into a Credit Agreement, which required AIG to issue 100,000 shares of convertible preferred stock to the Trust.  The Trust was established by the FRBNY for the purpose of acquiring, holding and ultimately disposing of approximately 77.9 percent of the voting stock of AIG.

The Federal Reserve and the Treasury Department made a determination that the Trust was the appropriate vehicle to hold a voting interest in AIG on behalf of the U.S. Treasury.  On January 16, 2009, three individuals -- Jill M. Considine,  Chester (Chet) B. Feldberg and Douglas L. Foshee -- were appointed as Trustees by the FRBNY in consultation with the Treasury Department and entered into the Trust Agreement.  On March 4, 2009, as required by the September 22, 2008 Credit Agreement between AIG and the FRBNY, AIG issued to the Trust 100,000 shares of Series C Perpetual, Convertible, Participating Preferred Stock (the “Series C Preferred Stock”).  These shares are convertible into, and have voting and dividend rights equal to, approximately 77.9 percent of the issued and outstanding shares of the common stock of AIG that would be outstanding after the conversion of the Series C Preferred Stock in full.  With the issuance of the stock on March 4, 2009, the Trustees commenced their formal responsibilities.