The US government announced Monday an expanded bailout for insurance giant AIG of more than 150 billion dollars, as the Treasury tapped into emergency funds originally set for banks.
The latest bailout plan, the largest in US history, came as AIG burned through billions of dollars of cash and reported a third-quarter loss of 24.47 billion dollars.
The original Federal Reserve rescue of 85 billion dollars in mid-September, at the time the largest in corporate history, was expanded by 37.8 billion dollars just a few weeks later, and involved the government acquisition of a 79.9 percent stake in the troubled insurer.
But AIG, the world's largest insurer before the global credit crisis, has continued to suffer from soured bets on credit default swaps (CDS) and other complex financial instruments amid a financial crisis that accelerated in October.
Under the revised program for AIG announced Monday, the Treasury will replace the entire previous package with a larger, longer-term 152.5 billion dollar program, including a 60 billion dollar five-year loan and 52.5 billion dollars to buy up distressed securities.
The Treasury will tap its Troubled Asset Relief Program (TARP) for 40 billion dollars to buy preferential shares in the company.
