A
AIG Financial Products Corp. (AIGFP)
Subsidiary of American International Group, Inc. that engages as principal in a wide variety of financial transactions.
American Life Insurance Company (ALICO)
Life insurance holding company subsidiary of AIG that focuses on non-U.S. markets.
American International Assurance Company Ltd. (AIA)
Life insurance holding company subsidiary of AIG that focuses on non-U.S. markets.
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B
basis points
One one-hundredth of a percentage point, used to express the movement of interest rates or index pricing
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C
collateral calls
When a counterparty asks the entity from which they have purchased protection for a financial transaction to provide collateral. Collateral offsets the expected exposure of the transaction if the protection seller defaults on its payment obligations. For AIG, the amount of collateral required is governed by International Swaps and Derivatives Association, Inc. (ISDA) Master Agreements and related Credit Support Annexes, and is a function of AIG’s credit ratings, the rating of the reference obligations and the market value of the relevant reference obligations.
commercial paper
Short-term debt instruments that institutions or finance companies issue to get cash.
counterparty
Person or institution in a financial transaction. In regards to AIG, the term is used most commonly in reference to swap transactions.
credit conditions
Refers to the general ability of people and institutions to repay loans and borrow money for homes, autos, school and other spending.

See New York Fed Credit Conditions ››
collateralized debt obligation (CDO)
Investment-grade security backed by a pool of bonds, loans and other assets with varying levels of risk. CDOs bundle the various types of debt into tranches of distinct maturities and risk levels, including tranches made of subprime loans.
credit default swap (CDS)
Transfers the credit exposure of fixed-income products between parties. The buyer of a credit swap receives credit protection, whereas the seller of the swap guarantees the credit worthiness of the product. Risk of default is transferred from the holder of the fixed income security to the seller of the swap.
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D
derivatives
Securities contract between two or more parties whose price is derived from one or more underlying assets. The value is determined by fluctuations in the underlying asset.
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F
Fannie Mae (Federal National Mortgage Association)
A government-sponsored enterprise created in 1938 to expand the flow of mortgage money by creating a secondary mortgage market. Fannie Mae operates under a congressional charter that directs Fannie Mae to increase the availability and affordability of homeownership for low-, moderate- and middle-income Americans.
Freddie Mac (Federal Home Loan Mortgage Corporation)
A stockholder-owned, government-sponsored enterprise chartered by Congress in 1970 to keep money flowing to mortgage lenders in support of homeownership and rental housing for middle-income Americans. Freddie Mac purchases, guarantees and securitizes mortgages to form mortgage-backed securities.
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G
Guaranteed Investment Agreement (GIA)
Structured investments with obligations that carry a guaranteed rate of return on interest.
goodwill
The excess of the cost of an acquired entity over its net book value. This intangible asset could reflect competitive advantage, a strong brand, reputation or high employee morale of the acquired company.

See Financial Accounting Standards Board: Statement no. 142 offsite
Government Accountability Office (GAO)
Investigative arm of Congress that examines matters relating to the receipt and payment of public funds.
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I
impairment charges
Reduction on a company's balance sheet that adjusts the value of a company's assets, often done for goodwill.
initial public offering
First sale of stock by a company to the public.
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L
LIBOR (London Inter-Banking Offer Rate)
Interest rate—officially fixed once a day by a small group of large London banks—that banks charge each other for loans. LIBOR is a widely used benchmark for short-term interest rates.
liquidity
Ability of an asset to be converted into cash quickly, without a price discount.
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M
money market
Segment of the financial market in which financial instruments with high liquidity and very short maturities are traded. Used for borrowing and lending in the short term, from several days to just under a year. Money market securities consist of certificates of deposit, bankers acceptances, U.S. Treasury bills, commercial paper, municipal notes, federal funds and repurchase agreements (repos).
money market mutual funds:
An open-end mutual fund that invests only in money markets. These funds invest in short term (one day to one year) debt obligations such as Treasury bills, certificates of deposit and commercial paper.
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prudential supervisor or regulator
Legal or government body that serves to prevent or minimize financial sector problems by ensuring financial institutions are able to meet their obligations.
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R
residential mortgage-backed securities (RMBS)
Type of mortgage-backed security composed of different noncommercial mortgage debts that securitizes the mortgage payments of non-commercial real estate. Different residential mortgages with varying credit ratings are pooled and sold in tranches to investors looking to diversify their portfolios or hedge against certain risks.
revolving credit facility
Agreement between a bank and a counterparty to provide a certain amount of funding on demand The borrower is not obligated to take out a loan at a particular time, but may borrow or repay part of the committed funding at any time over the facility’s term.
run
When many bank account holders withdraw all their funds at the same time in the belief the bank is insolvent.
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S
SIGTARP (Special Inspector General for the Troubled Asset Relief Program)
Established by the Emergency Economic Stabilization Act of 2008 to conduct, supervise and coordinate audits and investigations of the purchase, management and sale of assets under the Troubled Asset Relief Program.

See SIGTARP offsite
special purpose vehicles (SPV)
Usually a subsidiary company set up with an asset and liability structure and legal status that makes its obligations secure even if the parent company goes bankrupt. Operations limited to the acquisition and financing of specific assets.
stable value wrap contracts
Maintenance agreement that a stable value fund enters into with one or more financial institutions to maintain a stable or positive net asset value. The wrap contract smoothes performance and reduces the impact of market volatility. Stable value is a low-risk asset class that seeks capital preservation and consistent returns.
swap
Transaction where two people or institutions exchange securities. Currency and interest rate swaps are done among parties in different countries.
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T
Troubled Asset Relief Program (TARP)
U.S. government program created with the passage of H.R. 1424 enacting the Emergency Economic Stabilization Act of 2008 to establish and manage a Treasury fund. TARP gives the U.S. Treasury purchasing power to buy up mortgage-backed securities (MBS) from national institutions to create liquidity within money markets.

See Federal Reserve TARP Information offsite
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write-off
Reduction in the value of an asset or earnings by the amount of an expense or loss.
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