AIG's gallows humor gives bankers a laugh

WASHINGTON, Oct 11 (Reuters) - Insurance giant American International Group (AIG.N: Quote, Profile, Research, Stock Buzz), on the receiving end of a multi-billion dollar bailout from the U.S. Federal Reserve, was trying hard on Saturday to look on the bright side of life.

"Credit markets do not function. Why not, because the word credit comes from credibility," AIG Vice Chairman Jacob Frenkel told a group of top global bankers at a lively luncheon where he took a philosophical view of the upheaval in financial markets.

"The left side of the balance sheet has nothing right and the right side of the balance sheet has nothing left. But they are equal to each other. So accounting-wise we are fine," he told the Institute of International Finance.

AIG, crippled by losses on bad mortgage bets, was bailed out by the Fed with an $85 billion cash lifeline last month. Three days ago, the Fed expanded its assistance in a manner that could bring the total aid up to around $120 billion.

"Transparency is 'what you see is what you get' -- and what you don't see gets you," Frenkel said. (Reporting by Alister Bull; Editing by Tim Ahmann)