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Government Commits $30 Billion to AIG

The U.S. government agreed to give $30 billion to struggling insurer American International Group Inc, Reuters reported Sunday.

AIG’s board approved a new support package that includes a lower interest rate on its government credit line and more lenient terms on a government investment in its preferred shares.

This will be the third time that the government has stepped in to help AIG stay afloat. The global reach of the company may mean that it is too big to let fail. AIG is expected to report a fourth-quarter loss of over $60 billion dollars.

"The government really does not have the option of letting AIG totally blow up,"Robert Haines, senior insurance analyst at CreditSights, told Reuters.

The government has already been blamed by many for prolonging the financial crisis by allowing Lehman Brothers to fail. AIG is the second large company in a week to receive governmental assistance. Last week, the government agreed to increase its equity stake in Citigroup Inc to around 36 percent in an effort to help the bank.