AIG posts biggest loss in U.S corporate history

Insurance giant AIG posted an historic loss of $61.7 billion for the fourth quarter of 2008. The loss is the largest ever to be reported by a U.S. company.

Wall Street plunged below the 7,000 level for the first time in 12 years in Monday's opening trade, as worries over the financial sector deepened. American International Group, the largest U.S insurer, with operations in more than 100 countries was the main culprit for the sell-off as it revealed an historic loss. The ailing insurance giant had received an $85-billion bailout in September. Since then, the company has received bailouts worth $180 billion from the U.S. treasury. The last such bailout of $30 billion was announced yesterday by the government. The company's revenue fell to negative $23.8 billion, as the company had to reverse gains it recorded from investments in past quarters. The Federal Reserve and the Treasury considers AIG too big to fail, as it's bankruptcy posed a "system risk" to the global financial system. A fed spokesman said.

The potential cost to the economy and the taxpayer of government inaction would be extremely high. The additional resources will help stabilize the company, and in doing so help to stabilize the financial system.