From the Wall Street Journal:
American International Group Inc. was facing a severe cash crunch as ratings agencies cut the firm's credit ratings, forcing the giant insurer to raise $14.5 billion to cover its obligations....
..."The situation is dire," a person close to AIG said.Many market participants have been anticipating a government-led rescue. So far, however, the U.S. has been reluctant to step in, preferring instead to broker a private-sector solution....
...One sliver of optimism for AIG last night was that much of its exposure is related to credit default swaps, insurancelike contracts tied to corporate defaults. AIG's counterparties on these instruments include Wall Street firms, which may have an incentive not to immediately demand more collateral so as not to trigger a wider panic. Such collateral could come in the form of cash or liquid assets such as government or municipal bonds....MORE
