Which 2008 insurance corporation received an $85 billion U.S. government bailout?

The insurance corporation that received the initial $85 billion U.S. government rescue in 2008 was American International Group, or AIG.

AIG became a central casualty of the global financial crisis because its Financial Products division had sold enormous quantities of credit-default swaps. These contracts effectively insured complex securities, including bundles linked to subprime mortgages. When those securities lost value, AIG faced demands for additional collateral and could not meet them with its available cash.

On September 16, 2008, the Federal Reserve Bank of New York authorized an $85 billion secured loan facility. In exchange, the government received warrants representing a 79.9 percent equity stake and other control rights. The emergency intervention was intended to prevent AIG’s collapse from spreading through banks and financial institutions that relied on its guarantees.

The $85 billion figure refers to the initial rescue facility, not the entire eventual support package. Additional assistance later brought the government’s total commitment to roughly $180 billion. AIG is therefore distinct from Fannie Mae, which was placed into conservatorship, and Lehman Brothers, which filed for bankruptcy rather than receiving a comparable bailout.