Reporting from Washington — In a move sure to increase pressure on the Bush administration to extend financial help to automakers and other ailing industries, federal officials this morning announced an overhaul of the government’s bailout of insurance giant American International Group. The new plan increases the cost to about $150 billion and amounts to a tacit admission that the earlier effort fell short.
In a pre-dawn announcement before AIG announced a $24.5-billion third-quarter loss, the Treasury Department said it would spend $40 billion to buy an equity share in AIG “as part of a comprehensive plan to restructure federal assistance to the systematically important company.” The money comes from the $700 Troubled Asset Relief Program approved by Congress to try to rescue the financial system.