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Fed May Does Offer Bridge Loan To AIG

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The WSJ is reporting that the Fed is mulling over a possible rescue of AIG that would offer the company a secured bridge loan and result in the government controlling the firm.
Update: The Times and CNBC's David Faber have heard the same. In exchange for 80 percent stake in the firm, Faber says A.I.G. will get an $85 billion loan, which will be secured and included incentives for quick asset-sales by the insurer. Per the deal, the government would get warrants for most of AIG's equity, severely diluting shareholder value.
Update II: According to Reuters, The Bald and The Beard are currently briefing Congress on the deal.
Update III: Precise details still being hammered out but according to sources, Bernanke plans to name himself CEO. (Lay off me, just trying to lighten the mood in here.)
You're probably going to think I'm making fun of him, but I am being completely sincere when I say, if you feel like killing yourselves, check out the heartfelt letter Hank Greenberg sent to AIG CEO Robert B. Willumstad earlier today.
I usually don't make offers like this but Mr. Greenberg, if you need one, there's a hug with your name on it right here. Also, on a more serious note, please feel free to forward me the names of the guilty parties in ruining the company you built with your bare fucking hands, you WWII hero, and I will gladly spend the rest of my tenure on this company raining down righteous indignation all over their asses. Pro bono.
Update IV: Though turning it down would've indeed been hilarious, the Journal says the AIG board has approved the plan.
Update V: Part of the deal requires that existing management be fired, according to CNBC. They'll be replaced by the Turnaround Team of Chuck Prince, Stan O'Neal, and Jimmy Cayne, who are all currently living together and can thus use the carpool lane.
Here's a brain buster for you, that I'm mostly asking of the AIG inner sanctum members joining us this evening but anyone can feel free to answer-- when they were sitting around making the decision to say "thanks but we're good" to PE, who did they think was going to come along with a more desirable alternative to the shit that's gone down tonight? Really, who or what gave them the confidence to say "we're holding out for something better," besides a severe blow to the head?
Update VI: Per The Fed's website, it's official. The press release:

The Federal Reserve Board on Tuesday, with the full support of the Treasury Department, authorized the Federal Reserve Bank of New York to lend up to $85 billion to the American International Group (AIG) under section 13(3) of the Federal Reserve Act. The secured loan has terms and conditions designed to protect the interests of the U.S. government and taxpayers.
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 purpose of this liquidity facility is to assist AIG in meeting its obligations as they come due. This loan will facilitate a process under which AIG will sell certain of its businesses in an orderly manner, with the least possible disruption to the overall economy.
The AIG facility has a 24-month term. Interest will accrue on the outstanding balance at a rate of three-month Libor plus 850 basis points. AIG will be permitted to draw up to $85 billion under the facility.
The interests of taxpayers are protected by key terms of the loan. The loan is collateralized by all the assets of AIG, and of its primary non-regulated subsidiaries. These assets include the stock of substantially all of the regulated subsidiaries. The loan is expected to be repaid from the proceeds of the sale of the firm's assets. The U.S. government will receive a 79.9 percent equity interest in AIG and has the right to veto the payment of dividends to common and preferred shareholders.