The effort to prop up the massive insurance company through help from JP Morgan and Goldman Sachs seems to be dead. Here are stories from the NYT and CNBC. That leaves it up to the government to save AIG from falling into bankruptcy - and the government isnít exactly rushing to intervene. With the required funding going up by the hour - literally - it's questionable whether any rescue plan can be delivered in time. The factors flying around are incredibly complicated, so there's no telling how this will ultimately play out. From the WSJ:
A crisis that began with falling home prices and went on to engulf Wall Street has reached one of the world's largest insurance companies, threatening to intensify the financial storm and greatly complicate the government's efforts to contain it. The company is such a big player in insuring risk for institutions around the world that its failure could shake the global financial system. Underscoring that point, the company's former chief executive, Hank Greenberg, said this morning that if AIG doesn't catch a break from ratings agencies and quickly find lenders who are willing to front it some money while it sells off assets, the insurance giant could be forced to file for bankruptcy. "There is no time," said, Mr. Greenberg, the person most responsible for building the insurer into a global giant, during an interview with CNBC on Tuesday morning. "If they don't get a bridge loan, either from the private sector or the Fed" or some other willing investor, "and if ratings agencies don't give it breathing space," the company could be pushed into bankruptcy, even though it possesses the assets to see it through.
One incredible nugget mentioned this morning on CNBC: Officials from the Federal Reserve are having a hard time wrapping their arms around the AIG situation because they donít know enough about the insurance business (theyíre more adept at investment banks). Donít know if itís true, but this canít instill much confidence.