US offers new $30 bln bailout package to troubled AIG

US offers new $30 bln bailout package to troubled AIG
Updated at: 0121 PST, Tuesday, March 03, 2009
US offers new $30 bln bailout package to troubled AIG WASHINGTON: The US government Monday unveiled a fresh rescue plan worth 30 billion dollars to help AIG stave off collapse as the ailing insurer revealed the biggest loss in American corporate history.

The revamped bailout came as American International Group announced a quarterly loss of 61.7 billion dollars -- the biggest ever for a US firm in one quarter -- pushing up its net loss for 2008 to 99.3 billion dollars.

The government, which had already pumped some 150 billion dollars into AIG, said the restructured aid package sought to avert a potentially catastrophic collapse of what had been the world's biggest insurer.

Officials said a failure at AIG could send new shockwaves through an economy already ravaged by recession.

"Given the systemic risk AIG continues to pose and the fragility of markets today, the potential cost to the economy and the taxpayer of government inaction would be extremely high," the US Treasury and the Federal Reserve said in a joint statement.

"The additional resources will help stabilize the company, and in doing so help to stabilize the financial system."

David Kotok at Cumberland Advisors said the new bailout was an effort to avert the kind of collapse that occurred at Lehman Brothers that deepened the financial crisis.

"The policy behind this federal support seems clearly focused on avoiding a second Lehman-type failure and, subsequent, market meltdown," Kotok said.

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