by bintangkecil on Wednesday, September 17th, 2008 | News

Fearing a financial crisis worldwide, the Fed reversed course on Tuesday and agreed to an $85 billion bailout that would give the government control of the troubled insurance giant American International Group (AIG). With this $85 billion, the U.S. government will receive a 79.9% stake in the insurance company. The loan would be repaid by the asset sale.

AIG had been on the brink of bankruptcy as a private market solution to the nation’s largest insurer’s problem failed to materialize. And the markets don’t seem convinced that this loan will be the answer to all the firm’s problems.

A major concern is that the A.I.G. rescue won’t be the last. At Tuesday night’s meeting. lawmakers asked if there was any way of knowing if this would be the final major government intervention. Mr. Bernanke and Mr. Paulson said there was not. Indeed, the markets remain worried about the financial condition of major regional banks as well as that of Washington Mutual, the nation’s largest thrift.

Read it more from the Reuters.com here …

Tags: $85 billion, AIG, bankruptcy, cut rate, fed cut, market