AIG Has Its Hand Out Again

After blowing through $85 billion, AIG asks for and receives another $37.8 billion from the Fed:

Under the latest step, the central bank, working through the Federal Reserve Bank of New York, will provide an additional $37.8 billion to AIG's regulated life insurance subsidiaries and will receive investment-grade, fixed-income securities in return.

The money will be used to settle existing transactions related to its securities lending business. Under that program, AIG lent out securities to investors and others receiving both the value of such securities and a fee in return. The insurance giant then took the funds and placed them in other investments like mortgage-backed securities.

Now that the value of mortgage-backed securities has plummeted, AIG does not have the money to repay those who are returning borrowed securities. As a result, the central bank is stepping in to take those securities and provide AIG with cash to meet its obligations.

Where can I go when I can't meet my obligations?