Treasury To Extend Bailout Funds To Insurance Companies

Treasury To Extend Bailout Funds To Insurance Companies

The Treasury Department is working on ways to broaden its $700 billion bank rescue program to help insurance companies that are a critical backstop to a wide range of deals, bond issues and leasing arrangements, sources familiar with the matter said.

Treasury is worried that insurance companies, many of which report earnings next week, could face similar fates as American International Group as the credit crisis worsens, triggering a new wave of problems for the financial markets. AIG nearly collapsed last month when it was overwhelmed by losses from real estate investments and derivatives, requiring massive government loans of more than $123 billion. It has already burned three-quarters of that money.

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