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AIG bailout benefits big financial institutions

THE United States government bailout of insurance giant American International Group Inc has benefited at least two dozen financial institutions who collected about US$50 billion, according to media reports.

AIG - once the world's largest insurer - is paying its counterparties because it had agreed to guarantee them against losses from credit default swaps they had invested in.

Citing a confidential document and people familiar with the matter, The Wall Street Journal reported on Saturday that recipients of AIG money include Goldman Sachs Group Inc and Germany's Deutsche Bank AG, each of which received roughly US$6 billion in payments.

Also receiving AIG money last year were Merrill Lynch, now part of Bank of America Corp, French bank Societe Generale SA and, to a lessor extent, Morgan Stanley, Royal Bank of Scotland Group PLC and HSBC Holdings PLC, the newspaper said.

Meanwhile, Fortune magazine issued its own list of 15 banks that received AIG money, including: Calyon, Credit Agricole of France; UBS; Barclays; Coral Purchasing, DZ Bank of Germany; Bank of Montreal; and Rabobank of the Netherlands.

The disclosures come after the US central bank refused a congressional request for the names of all AIG's derivative counterparties. Federal Reserve Vice Chairman David Kohn said the information would undermine what little confidence remains in the financial markets.


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