Wall Street plunged again in a crisis of confidence Wednesday as anxieties about the financial system still ran high after the government's bailout of insurer American International Group Inc. The Dow Jones industrial average dropped more than 400 points, and investors seeking the safety of hard assets and government debt sent gold, oil and short-term Treasurys soaring.
The Federal Reserve is giving a two-year, $85 billion loan to AIG in exchange for a nearly 80 percent stake in the company after it lost billions in the risky business of insuring against bond defaults. Wall Street had feared that the conglomerate, which has its tentacles in various financial services industries around the world, would follow the investment bank Lehman Brothers Holdings Inc. into bankruptcy. The ramifications of the world's largest insurer going under likely would have far surpassed the demise of Lehman.
"People are scared to death," said Bill Stone, chief investment strategist for PNC Wealth Management. "Who would have imagined that AIG would have gotten into this position?"
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