Obama gives fourth round of aid to AIG

The Obama administration moved on Monday to extend as much as $30 billion in new government money to support the teetering insurance firm American International Group (AIG).

The new funds come on top of three previous rounds of government help at a cost of $150 billion.

{mosads}The latest moves come as AIG reported the largest quarterly loss in U.S. corporate history at $61.7 billion for the fourth quarter of 2008. Administration officials defended the bailout, saying that the firm writes insurance affecting as many as 100 million Americans — roughly one-third of the country — an acknowledgment that it remains too important to the American financial system to let it fail.

The new round of aid and steps taken Monday to restructure the firm underscore how tenuous financial markets are and how the administration has had to act repeatedly in recent days ahead of providing details of a broader plan to support the financial industry as a whole.

The Dow Jones Industrial Average fell below 7,000 on Monday morning, the lowest point since 1997, amid broader worries in the economy.

The administration last week changed the terms of its bailout of Citigroup to increase the government’s hand in running the company. Analysts and observers say the government should be on the road to nationalizing some banks fully. The Obama administration has said it wants banks to remain in private hands.

AIG has received the most government bailout money of any firm, and administration officials say the firm is so intertwined with the financial system that failing to help it would exact “extremely high” costs.

The administration on Monday also left open the possibility that AIG will require even more government money.

“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,” the Treasury Department said in announcing the new round of aid. “This will take time and possibly further government support, if markets do not stabilize and improve.”

The Senate Banking Committee is scheduled to hold a hearing on AIG on Thursday, which could prove a contentious review of steps taken under President Bush’s administration as well as Obama’s.