U.S. Employers Add 165K Jobs
U.S. employers added 165,000 jobs in April, and hiring was much stronger in the previous two months than the government first estimated. The job increases helped reduce the unemployment rate from 7.6 percent to a four-year low of 7.5 percent.
The Labor Department report is seen as a reassuring sign that the U.S. job market is improving despite higher taxes and government spending cuts that took effect this year.
WIth the markets closing on or close to their lows on Friday, this news is like pouring water on a drowing man. In other words, this is not the sort of news that is going to bolster the market.
Fasten your seat belts, it's going to be a bumpy ride.
This from our business news partner AP.
AIG to get up to $30B more in Fed aid
By IEVA M. AUGSTUMS
AP Business Writer(AP:CHARLOTTE, N.C.) Struggling insurer American International Group Inc. will receive up to $30 billion in additional federal assistance in the fourth government rescue of the company, people familiar with the matter told The Associated Press on Sunday.
The new infusion is intended to prop up AIG _ once the world's largest insurer _ as it is expected to announce $60 billion in quarterly losses early Monday, a person said on the condition of anonymity because the discussions are still ongoing.
The company, which is considered too large to be allowed to fail, previously received about $150 billion in loans from the government, which currently holds an 80 percent stake in the company.
Under the new deal, the U.S. Treasury and the Federal Reserve would provide about $30 billion in fresh capital to AIG from the government's Troubled Assets Relief Program, or TARP. The money would be provided as a standby line of equity that AIG could tap as its losses mount, the person said.
AIG has already received $40 billion from TARP.
The new plan also calls for the Federal Reserve to take stakes in two international units, the person said.
Instead of paying back $38 billion in cash with interest that it has used from a Federal Reserve credit line, AIG now will repay that amount with equity stakes in Asia-based American International Assurance Co. and American Life Insurance Co., which operates in 50 countries.
The $20 billion to $25 billion remaining on the Federal Reserve credit line will be available for borrowing, the person said.
In order to strengthen the company, AIG also plans to combine its U.S. and foreign property-casualty insurance operations into a new unit, with a new name and separate management, the person said. About 20 percent of the property-casualty business would be taken public.
To further reduce its debt, AIG will turn $5 billion to $10 billion worth of debt into new securities backed by life insurance assets.
The decision to approve a third revision of the AIG bailout is a continued bet by the federal government that there would be even greater risk to letting AIG fail, a person familiar with the Treasury's decision told The Associated Press on Sunday.
Federal officials feared that a bankruptcy of AIG could be disastrous for the global economy, which is in worse shape than it was six months ago, the person said, requesting not to be named because the talks are ongoing. Talk of the new rescue package has been going on for several weeks, as the Treasury gained insight of AIG's quarterly performance, the person added.
AIG spokesman Nick Ashooh declined to comment on the rescue package. The Federal Reserve Bank of New York, which is handling the government loan, did not return requests for comment Sunday evening. Treasury Department spokesman Isaac Baker also declined to comment.
The company's board met Sunday to vote on the revised bailout plan.
Major credit rating agencies have already signed off on the deal, according to media reports. Without the support of the credit rating agencies, AIG would have faced crippling cuts to its ratings.
AIG has been forced to seek more help in part because of the ongoing recession and its falling stock price, now well under $1. Among its biggest problems: It can't sell assets to pay back government loans because the credit crisis is preventing would-be buyers from getting financing to complete such deals.
As of Feb. 13, AIG had sold interests in nine businesses.
In November, the U.S. government restructured previous loans provided to AIG, giving the company about $150 billion in total as part of a rescue package to help the insurer remain in business amid the worsening credit crisis. That package replaced earlier loans, including the original $85 billion lent in September, after it became apparent the insurer needed more funds.
Problems at AIG did not come from its traditional insurance operations, but instead from its financial services units, and primarily its business insuring mortgage-backed securities and other risky debt against default.
Shares of AIG closed at 42 cents on Friday. The stock, which traded at $49.50 a year ago, has lost nearly all of its value since the market meltdown began in September.