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AIG spokesmen did not return calls seeking comment on the impact of the downgrades. But last month, the company estimated in a regulatory filing that a one-notch downgrade of its long-term senior debt ratings by both S&P and Moody's would force it to post $13.3 billion in extra collateral. The need for that extra capital would put a constraint on AIG's day-to-day liquidity position, which is why the company has been seeking new financing or capital investments. "While there is a chance the company can work its way through its liquidity problems if it can secure substantial bridge financing, we think this will be challenging to execute it in the current onerous credit environment," Credit Suisse analyst Thomas Gallagher wrote in a research note to clients. In its efforts to improve its liquidity, AIG has already received support from the New York governor and state's insurance regulator. On Monday, Gov. David Paterson said he would support a measure that allows AIG to use $20 billion of assets held by its subsidiaries to provide cash needed to stay in business. Paterson asked New York state insurance regulators to essentially allow New York-based AIG to provide a bridge loan to itself. The governor has also asked the head of New York's insurance department to talk with federal regulators about providing an additional bridge loan to AIG. "AIG still remains financially sound," Paterson said. That $20 billion in support though is unlikely to be nearly enough to help AIG. S&P's Clark said the financing facility agreed upon with New York regulators is a "helpful starting point," but AIG will "definitely need added capital and liquidity." The Fed on Monday asked Goldman Sachs Group Inc. to work with JPMorgan Chase & Co. about a possible short-term loan to keep AIG in business, said a person familiar with the request who could not speak publicly because talks were still ongoing. The loan could be for about $70 billion, the person said. Tuesday morning, while announcing fiscal third-quarter earnings, Goldman Sachs Chief Financial Officer David Viniar said during a conference call that he was "not going to comment on rumors about where we are in helping AIG." He said they are "good important clients" but refused to discuss the matter further.
[Associated
Press;
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