Former AIG CEO, Robert Willumstad, declined an award of 1.05 million restricted shares. Willumstad led the company for just three months, before the government appointed Liddy in September. Willumstad previously declined severance pay of $22.5 million stating that it was unfair while employees have lost considerable value in their AIG shares.

Just two months after receiving its $85 billion bailout from the Federal Reserve, the company is now in talks with the U.S. government over another bailout. Authorities over the new plan indicated that the new plan could involve the government's purchase of mortgage-backed securities from AIG. The Financial Times said negotiations may collapse, but that the company is pushing for a decision for its... More

Shares of AIG sunk 15 percent on Friday on growing concerns over the company's financial health. Figures released by the Federal Reserve showed that as of Wednesday AIG has borrowed $90.3 billion. The company stated that it would sell off certain business divisions in order to repay the loan.

American International Group Inc dropped nearly 44 percent as the U.S. plan to save AIG wipes out shareholder value. Under the agreement, the Fed will receive 80 percent stake in the company for an $85 billion loan and dividends may be halted on common and preferred stockholders.

The Federal Reserve has agreed to lend $85 billion to AIG in return for an 79.9 percent stake in the company. Under the agreement the Fed remains the right to veto any dividends to common preferred shareholders. The Fed stated that a failure at AIG could lead to significantly levels of financial instability in the financial markets and substantially higher borrowing costs.

According to a report on CNBC, the Federal Reserve is negotiating a bridge loan for $85 to $90 billion. Shareholders will be severely diluted by the bailout, and the government will receive AIG warrants for most of its equity. CNBC said, that Chairman Ben Bernanke and Henry Paulson stated that the bailout plan being negotiated "isn't a conservatorship."

American International Group Inc. is in talks with the Federal Reserve about a loan package in order to help the company raise immediate capital necessary to avoid chapter 11. Although, the Federal Reserve refused to help Lehman Brothers, the Fed is considering helping AIG out. A collapse of AIG would mean nearly $180 billion in losses towards financial institutions.

AIG is currently scrambling for cash. New York state has authorized the company to transfer nearly $20 billion in assets from its subsidiaries in order to use as collateral in its daily operations. This allows the company to provide a loan to itself. The company who continues to face difficulties due to the credit crises has seen its stock tumble more then 91 percent thus far this year.