Is AIG going down?

Photo by Spencer Platt/Getty Images) The New York Times‘ DealBook blog reports on the latest rumor about troubled insurance giant AIG: If a financing solution is not reached, AIG may file for bankruptcy as soon as Wednesday, a person briefed on the matter said Monday night. The company has hired the law firm Weil, Gotshal ...

592561_080916_aig5.jpg
592561_080916_aig5.jpg

Photo by Spencer Platt/Getty Images)

The New York Times' DealBook blog reports on the latest rumor about troubled insurance giant AIG:

If a financing solution is not reached, AIG may file for bankruptcy as soon as Wednesday, a person briefed on the matter said Monday night. The company has hired the law firm Weil, Gotshal & Manges — which is also handling the Lehman Brothers bankruptcy — to draw up bankruptcy papers.

Photo by Spencer Platt/Getty Images)

The New York TimesDealBook blog reports on the latest rumor about troubled insurance giant AIG:

If a financing solution is not reached, AIG may file for bankruptcy as soon as Wednesday, a person briefed on the matter said Monday night. The company has hired the law firm Weil, Gotshal & Manges — which is also handling the Lehman Brothers bankruptcy — to draw up bankruptcy papers.

As reporters Michael J. de la Merced and Eric Dash note, this leak may be a way of pressuring the Federal Reserve into coughing up some government money. It could be coming from the company or from buyers looking for a helping hand.

But if not, and AIG goes belly-up, it’s stunning how rapidly the dominoes are falling. NYU Economist Nouriel Roubini has been hammering home the point in recent days that highly leveraged financial firms such as Lehman Brothers have a “flawed business model.” He says that unless investment banks Goldman Sachs and Morgan Stanley find a buyer with deep pockets, just as Merrill Lynch leapt into the arms of Bank of America, they’ll go bankrupt, too.

UPDATE: Looks like the scare-tactics worked. The U.S. government is diving in.

See Also: Is It Time for the U.S. to Issue a Digital Dollar?

More from Foreign Policy

A worker cuts the nose off the last Ukraine's Tupolev-22M3, the Soviet-made strategic aircraft able to carry nuclear weapons at a military base in Poltava, Ukraine on Jan. 27, 2006. A total of 60 aircraft were destroyed  according to the USA-Ukrainian disarmament agreement.
A worker cuts the nose off the last Ukraine's Tupolev-22M3, the Soviet-made strategic aircraft able to carry nuclear weapons at a military base in Poltava, Ukraine on Jan. 27, 2006. A total of 60 aircraft were destroyed according to the USA-Ukrainian disarmament agreement.

Why Do People Hate Realism So Much?

The school of thought doesn’t explain everything—but its proponents foresaw the potential for conflict over Ukraine long before it erupted.

Employees watch a cargo ship at a port in China, which is experiencing an economic downturn.
Employees watch a cargo ship at a port in China, which is experiencing an economic downturn.

China’s Crisis of Confidence

What if, instead of being a competitor, China can no longer afford to compete at all?

Federal Reserve Chair Jerome Powell testifies in the U.S. Senate in Washington on Sept. 24, 2020.
Federal Reserve Chair Jerome Powell testifies in the U.S. Senate in Washington on Sept. 24, 2020.

Why This Global Economic Crisis Is Different

This is the first time since World War II that there may be no cooperative way out.

Chinese President Xi Jinping (left) and Premier Li Keqiang applaud at the closing session of the National People's Congress at the Great Hall of the People in Beijing on March 11.
Chinese President Xi Jinping (left) and Premier Li Keqiang applaud at the closing session of the National People's Congress at the Great Hall of the People in Beijing on March 11.

China Is Hardening Itself for Economic War

Beijing is trying to close economic vulnerabilities out of fear of U.S. containment.