In the most far-reaching intervention into the private sector ever for the Federal Reserve, the government stepped in Tuesday to rescue American International Group Inc. with an $85 billion injection of taxpayer money. The government will get almost an 80 percent stake in the company.
White House press secretary Dana Perino said that given AIG's scope, the possible failure of the company posed a greater risk than the $85 billion loan. She said that taxpayers would be paid back first, but when asked whether taxpayers may not get their money back at all, she said, "That is true."
"You have a government that is willing to lead, act where appropriate, and govern to make sure that we limit broader financial harm to the economy," she said.
President Bush approved the loan for AIG at the White House on Tuesday after being presented with a recommendation from Treasury Secretary Henry Paulson during a meeting of economic advisers.
Perino said she understands why Americans would be confused that the government would be willing to put taxpayer money at risk for some companies and not others. "We are dealing with very challenging times," she said, indicating that additional help to unstable companies will be determined on a case-by-case basis.
Perino said that according to the nation's top economic officials, the U.S. economy has the strength to "deal with these shocks."
