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You missed the point completely.
Nov 10 16:41 pm
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All Comments by Rigged »AIG: Paulson's Folly [View article]
The way the first "bailout" was structured, it was so onerous that AIG continued to face downgrades and further downgrade. The FEDs charged too high an interest and took 80% without any capital investment (since all the money was provided as a loan). The rating agency saw through the terms of the first bailout and all agreed that it is not good for AIG (i.e. how can AIG get enough revenue to pay the ongoing interest and thus AIG has no leverage in selling assets). Thus they continued to downgrade AIG and thus causing more collaterals to be required which then caused more downgrades...etc...
With the new deal, AIG financials (operating cash flow, cash on hand, etc.) have been upgraded. The agency will now be able to say that the new terms gives AIG a reasonable chance to continue to operate and pay the interests to the FEDs from its ongoing revenue. AIG will also be able to pay the FED back the principals when it has asset sales. This will mean that the rating agencies will be less inclined to downgrade AIG further.
Now that the new term is 5 years, AIG will have leverage in dealing with 3rd parties when it sell its assets. With the FED owning 80% of AIG, this would benefit the FED also.