Associated Press
 
September 16, 2008
 
WASHINGTON -- The government has stepped in for the second time this month to help rescue a floundering financial giant.
 
Insurance giant American International Group will get a 2-year emergency loan worth up to 85 billion dollars. AIG has been teetering on the edge of failure because of stresses caused by the credit crunch brought on by the collapse of the subprime mortgage market.
 
The loan will allow the government to obtain a 79.9 percent stake in AIG and the right to remove senior management. Those terms are similar to the deal the government cut earlier in the month with mortgage giants Fannie Mae and Freddie Mac.
 
The Federal Reserve says it concluded that a "disorderly failure" of AIG could have caused even more problems for the shaky financial markets.
 
Meanwhile, Wall Street ended another tumultuous day with a big gain, partly recovering from its worst sell-off in years after the Federal Reserve said it was keeping interest rates steady. The Fed soothed fears of a worsening financial crisis even as the market waited to learn the fate of troubled insurer American International Group Inc.
 
The Fed signaled that while there are growing strains in the financial markets, it expects its earlier rate cuts and efforts to boost liquidity in the banking sector and help the economy.
 
The Dow Jones industrial average is ending up 141 at the 11,059 level after. On Monday, the Dow tumbled 504 points, its largest drop since the September 2001 terror attacks.
 
And crude oil's remarkable decline continued. Near-month crude fell $4.56 to settle at $91.15 a barrel.
 
And a person briefed on talks between Barclays PLC and Lehman Brothers Holdings Inc. says the British bank has agreed to buy at least some investment banking and trading operations of the securities firm.
 
An announcement of the deal to buy all or part of those businesses will be announced as early as Tuesday afternoon, the person said. He spoke on condition of anonymity because a final agreement had yet to be reached.
 
The person confirmed media reports that Barclays President Robert Diamond has addressed Lehman investment bankers to inform them of his company's intentions.
 
Lehman filed for Chapter 11 bankruptcy protection on Monday. Barclays withdrew from weekend talks to rescue Lehman through an outright acquisition.