Fearing meltdown, Fed bails out AIG with $85-billion package

feBureau, Agencies
Posted: Thursday, Sep 18, 2008 at 0115 hrs IST
Updated: Thursday, Sep 18, 2008 at 0115 hrs IST

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New York, Mumbai, Sep 17: much as 14 basis points.

AIG dropped 42% to $2.16 in early Wednesday trading in New York, after falling 80% in the past week. The seizure in credit markets and more than $500 billion of losses related to subprime mortgages forced the US government to take over Fannie Mae and Freddie Mac, which control about half of America’s $12 trillion in home loans, and drove Lehman Brothers Holdings Inc out of business.

The Fed’s loan doesn’t require asset sales or the company’s liquidation, though these are the most likely ways AIG will repay the Fed, officials said. ...

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