AIG pleads for billions in emergency aid

AIG, the giant insurer, is now seeking $40 billion of emergency funds from a variety of sources, including the Fed.  The stock sank over 30 percent last week and as much as another 52 percent this morning.

I am not aware of the Fed offering money to insurance companies but perhaps the Fed’s choice to open the discount window to investment banks has given AIG some false hope of government assistance.

AIG is in a tough spot, being a bond insurer in an age where creditworthiness is falling and defaults are rising. 

Between AIG, Lehman Brothers and Merrill Lynch confidence in U.S. financial markets has taken another major hit.  The Dow lost close to 340 points shortly after opening and several world markets closed lower.