American International Group Inc. (AIG) is rapidly depleting the $123 billion in loans it has received from the Federal Reserve, according to a report in the New York Times.

The article notes that, according to numbers from the Fed, $90 billion of the $123 billion available to the insurer has already been drawn down. In September, the company received an $85 billion emergency line of credit, which was later augmented by a $38 billion loan.

The Times says that rate at which AIG has spent the funds may imply that the company was in worse shape that it acknowledged in financial filings and that irregular accounting may have helped mask troubles at the insurance giant.

Troubling for some is that of the $59 billion of the $72 billion AIG has used from original loan, the company has provided no breakdown. The Times notes that a portion of the loan has been used to fund day-to-day operations, "a broad category that raises eyebrows since the company has been tarnished by reports of expensive trips and bonuses for executives."

However, the article estimates the biggest portion of the Fed loan is being used as collateral for AIG's derivatives contracts, including credit-default swaps.

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