AIG Bailed Out Again

Troubled insurer American International Group got a reworked $152.5 billion deal from the federal government, as the Federal Reserve and Treasury Department made significant changes to the terms of the company's original bailout. The Fed announced that it will reduce AIG's original $85 billion bridge loan to $60 billion, and it will cut the interest rate by 5.5 percentage points. In addition, the Treasury will use its special authority under last month's $700 billion bailout law — the so-called Troubled Asset Relief Program — to purchase $40 billion in preferred stock.