U.S. Government Now Owns Over 80% Of A.I.G.

According to the New York Times, the U.S. government has just agreed to give American International Group (A.I.G.) an additional $30 billion dollars in an attempt to further stabilize the failing insurer. The article continues:

The intervention would be the fourth time that the United States has had to step in to help A.I.G., the giant insurer, avert bankruptcy. The government already owns nearly 80 percent of the insurer’s holding company as a result of the earlier interventions, which included a $60 billion loan, a $40 billion purchase of preferred shares and $50 billion to soak up the company’s toxic assets.

The loss that A.I.G. is preparing to report on Monday would be the largest ever by any company in a single quarter. Still, of the $62 billion loss being reported, only about $2 billion is a cash loss. The rest is the result of noncash items like write-downs on the value of the company’s assets.

If I know anything about how the stock market works, I would imagine that A.I.G. stock prices will dip significantly at the start of Monday's trading day. We shall find out.

[Update] - Well, A.I.G.'s stock price did not dip, but the market is down significantly. The Washington Post has the news:

The Dow plummeted 93 points, or 1.3 percent, to 6,969 about 24 minutes into trading -- a level not seen since 1997. The Standard & Poor's 500-stock index fell 1.4 percent, or about 10 points, while the tech-have Nasdaq fell .5 percent, or 7 points.

Shares of AIG were up 7 cents, or 17 percent, to 49 cents in early trading but are off 99 percent for the year.

Read the rest of the story here.