AIG too important to allow to collapse despite $60bn losses
Pumping $30bn (£21bn) more of US taxpayer funds into embattled insurance giant AIG is ultimately cheaper than letting it collapse and endanger the broader economy, officials have told Reuters
The US government will announce the latest cash injection for AIG today, as the company announces its results – expected to be a $60bn (£42bn) loss.
The anonymous source said AIG posed a significant systemic risk for the US financial system and as long as that was the case there might be a need for continued government aid.
Allowing AIG to collapse would have sent shockwaves through the retail insurance sector as well as posing a systemic risk to the economy that US authorities decided could not be allowed to happen, the source said.
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