AIG has $61.7 billion loss, new U.S. aid may not be last

By Lilla Zuill and Jonathan Stempel

NEW YORK (Reuters) - American International Group Inc posted a record $61.7 billion quarterly loss on Monday and got a new but not necessarily final government bailout, after officials concluded again that letting the insurer fail would threaten the world financial system.

AIG will get access to up to $30 billion of new capital after getting a commitment for $150 billion in aid last year that gave the government a stake of nearly 80 percent.

The latest bailout increases the government's commitment to keeping AIG on life support, and avoids for now any crippling credit rating downgrades that could force AIG to come up with billions of dollars it might not have.

"It's a pretty strong reminder that the U.S. Treasury is still all that stands between the current market environment and the ongoing threat of systemic financial meltdown," said Christopher Garman, head of Garman Research LLC in Orinda, California, and a former Merrill Lynch bond strategist.

White House spokesman Robert Gibbs said "today's actions were critical" to preventing AIG from further threatening the financial system.

Separately, the Treasury Department and Federal Reserve said urgent action was needed now to keep AIG in business.

"Given the systemic risk AIG continues to pose and the fragility of markets today, the potential cost to the economy and the taxpayer of government inaction would be extremely high," they said in a joint statement.

Speaking on a conference call, AIG Chief Executive Edward Liddy called the market "a pretty crummy place" right now, and said fixing the insurer could take "several years."