Bernanke Outlines Plan for Pulling in Stimulus

Federal Reserve Chairman Ben Bernanke began Wednesday to outline the central bank's strategy for reeling in stimulus money once the economic recovery is more firmly rooted.

Bernanke Wins Confirmation to Second Term

The Senate has confirmed Ben Bernanke for a second term as chairman of the Federal Reserve. The 70-30 vote came amid criticism of his judgment ahead of the financial crisis and his support for massive Wall Street bailouts.

Fed Holds Rates at Record Low to Fuel Recovery

The Federal Reserve pledged Wednesday to hold interest rates at a record low to drive down double-digit unemployment and sustain the economic recovery.

AIG to Get $85 Billion Loan, Give Up 80% Stake

American International Group will get an $85 billion loan from the federal government in exchange for an 80 percent stake in itself, sources have told CNBC.

Sources said the loan, which will allow AIG to avoid bankruptcy, will be secured and include incentives for quick asset-sales by AIG.

The deal severely dilutes existing shares of the company.

AIG has been racing the clock to avoid a bankruptcy filing on Wednesday, making efforts to work out a deal with the Federal Reserve to shore up its finances.

Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke met with Senate and House leadership Tuesday night to discuss how to assist AIG, sources said.

The Fed's financial aid for the troubled insurer marks a reversal of its decision on Monday to refuse a bridge loan to AIG.

The Fed met with the company's advisers throughout Tuesday and came to a better understanding of what is needed to help the company through its current crisis, people familiar with the negotiations told CNBC.

AIG to Get $85 Billion Loan, Give Up 80% Stake....

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....

Bernanke gloomy on housing, economy

By Chris Isidore

NEW YORK (CNNMoney.com) -- The housing finance crisis and spiraling energy costs will remain a drag on the U.S. economy for the rest of the year, Federal Reserve Chairman Ben Bernanke told lawmakers in a gloomy presentation about the economic outlook.

"The economy continues to face numerous difficulties, including ongoing strains in financial markets, declining house prices, a softening labor market, and rising prices of oil, food, and some other commodities," Bernanke told the Senate Banking Committee early Tuesday.

The nation's top central banker warned "many financial markets and institutions remain under considerable stress, in part because the outlook for the economy, and thus for credit quality, remains uncertain."

Bernanke gloomy on housing, economy....

Fannie, Freddie Tumble on Bailout Concern, UBS Cut

By Dawn Kopecki and Shannon D. Harrington

July 10 (Bloomberg) -- Fannie Mae and Freddie Mac, the two biggest providers of financing for U.S. home loans, fell to the lowest levels in 17 years in New York trading after a former Federal Reserve president said the companies may need a government rescue.

Fannie Mae tumbled as much as 24 percent and Freddie Mac slumped as much as 34 percent in New York Stock Exchange composite trading after UBS AG analysts said in a report today that Freddie Mac's decline creates ``challenges'' for the company's plan to raise $5.5 billion.

Chances are increasing that the U.S. will bail out Fannie Mae and Freddie Mac because they don't have enough capital to weather the worst housing slump since the Great Depression, former St. Louis Federal Reserve President William Poole said in an interview. Freddie Mac owed $5.2 billion more than its assets were worth in the first quarter, making it insolvent under fair value accounting rules. The fair value of Fannie Mae assets fell 66 percent to $12.2 billion, data provided by the Washington- based company show, and may be negative next quarter, Poole said.

Fannie, Freddie Tumble on Bailout Concern, UBS Cut....