AIG latest finance house to get federal aid

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AIG latest finance house to get federal aid

AIG latest finance house to get federal aid
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The U.S. Federal Reserve is to lend up to the equivalent of 60 billion euros to the American International Group.

AIG had been pushed to the brink of bankruptcy by problems originating in the U.S. mortgage crisis.

The Fed says it is taking action because of the grave danger to the financial system if AIG were to go under.

The loan is aimed at assisting the firm to meet its obligations as they come due.

It will facilitate a process under which AIG will sell some of its businesses.

In return for the bailout, the U.S. government will receive an 80 percent stake in the concern.

The loan is expected to be repaid from the proceeds of the sale of AIG’s assets.

The rescue comes after a streak of Wall Street disasters provoked uproar in financial markets.

Analysts say it will be controversial, as it leaves AIG shares virtually worthless, and shows an inconsistency of approach.

Lehman Brothers was left to declare bankruptcy. Yet the Treasury bailed out former government agencies Fannie Mae and Freddie Mac.