In a dramatic move early today the U.S. Federal Reserve stepped in to save one of the world's biggest insurance companies from going under.
Just 24 hours after US officials hinted Washington would not intervene to save threatened financial institutions, the Federal Reserve has agreed to provide a £43billion loan to American Insurance Group.
The deal will give the Federal Reserve an 80 per cent stake in AIG, which employs 116,000 around the world, including 2,000 in the UK.
If the Federal Reserve takes a controlling stake, it is likely that it would want to replace AIG’s board as well as its chief executive and chairman, Robert B. Willumstad.
The dramatic move would mirror the way the Federal Reserve stepped in two weeks ago to run America's two biggest mortgage lenders Freddie Mac and Fannie Mae. Full story...