The Federal Reserve Board late Tuesday confirmed it would authorize the Federal Reserve Bank of New York to lend as much as $85 billion to American International Group Inc., which has unraveled in the face of mounting losses related to insurance on complex financial instruments and credit downgrades that forced the company to raise billions in capital. The New York insurance company is the largest in the world. Bailing out a private company not under its direct purview is an extraordinary and historic move for the Federal Reserve, whose primary roles include setting United States monetary policy and banking supervision and regulation. In a statement, the Federal Reserve said, “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.”

Source: [1] http://www.bizjournals.com/buffalo/stories/2008/09/15/daily22.html