from some of its major creditors. conditioning our lending on aig coercing certain creditors to agree to reduce the amounts due and owing from aig would have been to ensure failure. the tactic would have undercut our primary goal in providing aig with necessary liquidity – enabling aig to pay creditors, maintain consumer, regulator, and counterparty confidence, and avoid default. a default would have triggered aig ’ s bankruptcy, with all of the systemic risk that bankruptcy would have entailed. while these tactics have been used in certain sovereign debt restructurings, they can be used there only because sovereigns cannot go bankrupt, and only with months of pre - planning. any attempt to condition our lending would have created further uncertainty in a time of panic as to which of aig ’ s counterparties would get paid and which would be forced to take substantial losses. one of our objectives was to calm market participants, and uncertainty ( and the allegations of favoritism that surely would have followed ) does not do that – it fuels fear. would the conditions extend only to aig ’ s credit default swap ( cds ) counterparties, or might the federal government make value judgments as to other aig contracts? would senior unsecured debt holders be forced to take concessions? and most importantly, would a creditor who was pressed for a discount simply refuse and declare a default? conditional lending would have heightened the risk of an aig default, which is what we were trying to – and did – avoid. the default risk would have been exacerbated by the credit rating downgrade that almost certainly would have followed any effort by aig to coerce creditor concessions. aig ’ s failure to pay all of its contractual obligations in full would likely constitute a selective default resulting in a downgrade. that downgrade not only would have triggered potential terminations and collateral calls at aig ’ s financial products unit ( aig fp ), but also would have resulted in substantial value destruction at aig ’ s insurance companies. large annuity distributors likely would have stopped selling aig products, replacing them with better - rated, more stable competitors. high - end life insurance sales would have decreased significantly, and remaining sales would have been vulnerable to adverse selection. withdrawals and surrenders among existing customers would have increased, depleting cash reserves and creating pressure for asset sales at depressed levels. as a result of a downgrade, many of aig ’ s insurance companies may

, which should result in lower lending costs and should make the assessment of the risk of the assets easier. fourth, i think the overall securitization market will be smaller. the demise of parts of the shadow banking system such as the sivs and the fact that banks are likely to have to consolidate some off - balance activities back onto their books at the end of this year should reduce the overall demand for and supply of securitized product. developing and implementing the talf has been challenging. as the program enters into a new phase with the financing of cmbs and legacy cmbs, we will encounter further hurdles that we will have to overcome, adjusting and modifying the program as needed in order to make it more effective. nevertheless, i am confident that we will continue to build on our initial success, reopening credit channels to consumers and businesses. thank you very much for your attention.