AIG seen in billion pound loan deal with Fed

(Reuters) - The Federal Reserve is negotiating a $85-90 billion (48 billion to 50 billion pound) secured bridge loan for American International Group, according to a U.S. report on CNBC.

Shareholders would be severely diluted by the bailout that involves the bridge loan. The government would receive AIG warrants for most of its equity in the bailout being negotiated. CNBC said the deal would give AIG incentive to sell its assets quickly to help pay off the bridge loan.

Federal Reserve Chairman Ben Bernanke, U.S. Treasury Secretary Henry Paulson and others are involved in the talks, CNBC said, adding that the bailout plan being negotiated "isn't a conservatorship".