Government Officials Said to Consider AIG Conservatorship Plan

By Hugh Son, Craig Torres and Erik Holm

Sept. 16 (Bloomberg) -- Regulators are considering putting American International Group Inc. into conservatorship while the Federal Reserve is in talks about a ``loan package'' as time runs out for the insurer to raise cash, according to three people briefed on negotiations involving U.S. and state officials.

Executives from AIG, bankers and Treasury and Federal Reserve officials were meeting today at the New York Fed, said two of the people, who declined to be named because the talks are private. Treasury spokeswoman Michele Davis declined to comment. David Neustadt, a spokesman for New York State Insurance Superintendent Eric Dinallo, had no immediate comment.

AIG is trying to stave off a collapse after its credit ratings were cut yesterday and shares plunged 79 percent since Sept. 11. Goldman Sachs Group Inc. and JPMorgan Chase & Co., which have led efforts to find a private-sector solution, told the Fed such an effort would be difficult, one person said. The insurer fell another 40 percent in extended trading in New York on concern a government takeover would wipe out shareholders.

Government Officials Said to Consider AIG Conservatorship Plan....