Details are scant but it appears that the Fed will provide a bridge loan to AIG (via WSJ):
The U.S. government was moving toward an emergency rescue of American International Group Inc. — one of the world’s biggest insurers — signaling the intensity of its concerns about the danger a collapse could pose to the financial system.
It’s a dramatic turnabout for the federal government, which has strongly resisted overtures from AIG for an emergency loan or some intervention that would prevent the insurer from falling into bankruptcy. Just last weekend, the government effectively pulled the plug on Lehman Brothers Holdings Inc., allowing the big investment bank to fail instead of giving it financial support.
The final decision to provide a federal backstop for AIG came on Tuesday, as the federal government concluded it would be “catastrophic” to allow AIG to fail, according to a person familiar with the matter. Federal officials had tried to get the private sector to pony up some funds during its 3-day meeting in New York over the weekend. But those efforts failed and with no private sector support forthcoming, Fed Chairman Ben Bernanke, NY Fed President Timothy Geithner and Treasury Secretary Henry Paulson concluded that federal assistance would be necessary to avert an AIG bankruptcy, which they feared would have disastrous repercussions throughout the financial markets.
We’ll know more before the open tomorrow….