AIG reported a $61.66 billion loss for the fourth quarter, the largest corporate loss in United States history.

“The company continues to face significant challenges, driven by the rapid deterioration in certain financial markets…. The additional resources will help stabilize the company, and in doing so help to stabilize the financial system,” the Treasury and Federal Reserve said in a statement.

The new deal, the government’s fourth for AIG, represents a nearly complete reversal from the one first laid out in mid-September. Back then, federal officials acted as a demanding lender, forcing the insurer to pay a steep interest rate for what was expected to be a short-term loan. Now the government is relaxing loan terms by wiping out interest in hopes of preserving AIG’s value over a longer period.

Tax payers have been on the ‘expendable’ list as the Government now appears to have no desire whatsoever to protect taxpayer interest any longer.

AIG CEO: CEO: COMPANY WAS IN MUCH DIRE CONDITION THAN EXPECTED
- Deal with the government keeps difficult economic situation from deteriorating further by making sure company survives.

Today’s Bailout highlights:

US GOVT TO EXCHANGE $40B IN CUMULATIVE PREFERRED SHARES FOR NEW COMMON SHARES

- In agreement with US government for $30B equity capital facility
- AIG to issue convertible preferred stock representing 77.9% of shares to US Treasury trust
- US Gov’t ready to support AIG further if markets do not stabilize
- Fed to make new loans of up to $8.5B to AIG Life Subsidiaries
- Fed states AIG continues to face “significant challenges”
- The restructuring components of the government’s assistance begin to separate the major non-core businesses of AIG, as well as strengthen the company’s finances.
- The long-term solution for the company, its customers, the U.S. taxpayer, and the financial system is the orderly restructuring and refocusing of the firm.
- As required by the credit agreement governing the Revolving Credit Facility, AIG has agreed to issue on March 4, 2009, shares of convertible preferred stock representing an approximately 77.9% equity interest in AIG to an independent trust for the sole benefit of the United States Treasury.