CNN has the story, with the Fed’s explanation in a nutshell:
Officials decided they must act lest the nation’s largest insurer file bankruptcy. Such a move would roil world markets since AIG has $1.1 trillion in assets and 74 million clients in 130 countries.
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[…] company that commands over $1 trillion in assets spread over 130 countries among 74 million clients* — the U.S. government just purchased one hell of a big stick to go along with its baby […]
It is not the government.
The fed is not part of the United States government. They are a private entity. They are on their own, and we do not owe them anything.
Sorry Bruce, but the Federal Reserve IS part of the U.S. government, although SOME parts of it are private.