AIG bail out plan

In a bid to save financial markets and the economy from further turmoil, the U.S. government agreed Tuesday to provide an $85 billion US emergency loan to rescue the huge insurer AIG.
The Federal Reserve said in a statement it determined that a disorderly failure of American International Group could hurt the already delicate financial markets and the economy.
It also could "lead to substantially higher borrowing costs, reduced household wealth and materially weaker economic performance," the Fed said. The Fed said in return for the loan, the government will receive a 79.9 per cent equity stake in AIG. The problems at AIG stemmed from its insurance of mortgage-backed securities and other risky debt against default. If AIG couldn't make good on its promise to pay back soured debt, investors feared the consequences would pose a greater threat to the U.S. financial system than this week's collapse of the investment bank Lehman Brothers.