Federal officials will take 80% stake in the nation's largest insurer in an $85 billion rescue plan to prevent financial chaos worldwide. More bad news. Why is it the Bush administration did not want to help the people in trouble from mortgage issues, but folds over backwards for the companies who made the same mistakes.

NEW YORK (CNNMoney.com) -- In a stunning turn, the Federal Reserve Board is taking over crumbling insurer American International Group in an $85 billion rescue plan, officials announced Tuesday evening.

The Fed authorized the Federal Reserve Bank of New York to lend AIG (AIG, Fortune 500) up to $85 billion. In return, the federal government will receive a 79.9% stake in the company.

Officials decided they must act lest the nation's largest insurer file bankruptcy. Such a move would roil world markets since AIG (AIG, Fortune 500) has $1.1 trillion in assets and 74 million clients in 130 countries.

"The Board determined that, in current circumstances, a disorderly failure of AIG could add to already significant levels of financial market fragility and lead to substantially higher borrowing costs, reduced household wealth and materially weaker economic performance," the Fed said in a statement.

A bailout of AIG would mark the most dramatic turn yet in an expanding crisis that started more than a year ago in the mortgage meltdown. The resulting credit crunch is now toppling not only mainstay Wall Street players, but others in the wider financial industry .

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Why did they do thaty you ask AIG insures alot of the farms and also works with the USDA on crop insurance and for farmers THATS WHY. Think about it do you want the company that holds the insurance for the USDA going under.

Well then welcome to the United Socialists of America.

And the bonus and severance packages will be larger now.

What should be larger are the indictments and seizures of those that ran these outfits like their personal piggy banks and took huge sums for bad governance.

Sad, but it will not happen. Look at all of these scandalous money crooks since Enron and Worldcom. How much restitution?

It just shows, they will call for commissions to investigate and then after many months to let is pass out of memory, they will find no one at fault and it was a cycle.

Government always takes care of big business. They operate hand in hand.

But it only effects the little guys and gals like me. You TR member of the month winners with your millions in prize money are not effected.

Dang, I know you are jealous....

Smurf was not supposed to post the winnings. Now the IRS will get me.

The question is, will the LOAN actually be paid back? I'm so sick of the corporate fat cats getting the multi-million dollar paychecks each year - for what? Yes, being at the top of the company is not easy work, but do they really deserve multi-million dollar paychecks for it? Especially when they screw up?

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problem is the goverment really doesn't have the bucks to do so print more money they keep it up and the only good thing about a dollar will be the fact that it is paper