approved the establishment of an additional lending facility that would provide a permanent solution to the aig securities lending program's losses and liquidity drains, thus eliminating the need for the securities borrowing facility. under the new facility, the new york reserve bank extended approximately $ 19. 5 billion in secured, nonrecourse credit to a special purpose limited liability company in which aig would hold a $ 1 billion first - loss position ( maiden lane ii ). maiden lane ii then purchased, at market prices, rmbs with a par value of $ 39. 3 billion from certain aig domestic insurance company subsidiaries. this facility allowed aig to terminate its securities lending program and to repay fully all outstanding amounts under the securities borrowing facility, which was then terminated. the federal reserve also took steps to help address the drain of liquidity on aig arising from potential collateral calls associated with credit default swap contracts written by financial products on multi - sector cdos. the new york reserve bank made a secured, non - recourse loan in the amount of $ 24. 3 billion to another special purpose limited liability company ( maiden lane iii ). maiden lane iii then purchased, at market prices, multi - sector collateralized debt obligations with a par value of approximately $ 62 billion from credit default swap counterparties of financial products in return for the agreement of the counterparties to terminate the credit default swaps. aig provided $ 5 billion in equity to maiden lane iii to absorb future losses on the cdos held by maiden lane iii. the federal reserve loans to maiden lane ii and iii have a term of six years and are secured by the entire portfolio of each company. the federal reserve reports the amount of the loans to these facilities and the value of the supporting collateral regularly on its website. the investment manager to the new york reserve bank for these entities projects that, even under very stressed scenarios, the loans to maiden lane ii and maiden lane iii will be repaid over time with no loss to the taxpayer. on monday, march 2, 2009, aig announced a loss of approximately $ 62 billion for the fourth quarter of 2008, ending a year in which aig suffered approximately $ 99 billion in total net losses. as a consequence of increased economic weakness and market disruption, the insurance subsidiaries of aig, like many other insurance companies, have recorded significant losses on investments in the fourth quarter of 2008. commercial mortgage - backed securities and commercial mortgages have experienced especially severe impairment in market value, requiring a steep

conditions as other participants. the cpff is a generally available program that involves the purchase, through a special purpose vehicle with financing from the federal reserve, of three - month unsecured and asset - backed commercial paper directly from eligible issuers. as of february 18, 2009, the aig - affiliated cpff participants had borrowed approximately $ 14 billion in the aggregate from the facility. during the month of october, credit markets continued to be severely stressed and liquidity pressures on aig did not abate even with access to government credit. the company was negatively affected by the decline in market value of many assets owned by aig entities or to which aig entities were exposed through derivatives. losses on the rmbs portfolios in the securities borrowing program and credit default swap protection financial products had written on multi - sector cdos together accounted for approximately $ 19 billion of the $ 24. 5 billion in losses announced by the company for the third quarter of 2008. the losses experienced through the third quarter, and the consequent capital erosion placed in jeopardy the credit ratings of aig. had the credit ratings agencies downgraded aig in november, aig would have been required to find additional funds to meet collateral calls and termination events on the exposures held by financial products alone. the board and treasury therefore took a series of actions, announced on november 10, 2008, to mitigate the effect of third quarter losses and liquidity drains on aig and its subsidiaries, and provide for a more stable capital structure. these actions were designed to facilitate aig's execution of its divestiture plan in an orderly manner, and thereby protect the interests of the taxpayers, both by preserving financial stability and by giving aig more time to repay the federal reserve and return the treasury's investment. as part of the set of actions, treasury invested $ 40 billion in newly issued senior preferred stock of aig under its recently granted tarp authority. in connection with that investment, the federal reserve modified the terms of the revolving credit facility to be more sustainable : the maturity of loans extended under the facility was extended to five years ( due 2013 ), the maximum amount available was reduced from $ 85 billion to $ 60 billion, and the interest rate and commitment fees were reduced. the facility remained secured by substantially all of aig's assets, and the company continued to be required to apply proceeds of asset sales to permanently repay any outstanding balances under the facility. at the same time, the board