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An Analysis of US Government’s Aid to AIG: Relevant Enlightenments to China for Pushing forward Debt-to-Equity Swap Program(Special Issue No. 11, 2017)


By Wang Yingying, Department of Macroeconomic Research, DRC

Research Report Special Issue No. 11, 2017 (Total 1535) 2017-3-23

Abstract: After the outbreak of the international financial crisis in 2008, the US government implemented the Troubled Asset Relief Program (TARP), offered financial support to the enterprises in deep liquidity crisis, promoted their asset restructuring and structural reform, and successfully avoided the collapse of businesses due to domino effects. The American International Group (AIG) received the lion’s share of relief funds from the government with a total of 182.3 billion US dollars for four years and three months, which successfully saved AIG from the edge of bankruptcy, further reduced the market turmoil, and stabilized the financial system across the board. On the whole, the implementation of TARP has some characteristics: all the rescue measures were carried out under the legal framework; market mechanism was brought into full play; and "blood transfusion" and "surgery" were made side by side. Viewing from the institutional perspective, China could draw some reference from AIG's case in pushing forward the debt-to-equity swap program and effectively resolve the corporate debts.

Key words: corporate debts, Troubled Asset Relief Program (TARP), asset restructuring