White House defends takeover of AIG

WASHINGTON (AP) -- The White House says the extraordinary federal takeover of American International Group was needed to prevent broader harm to the reeling economy. But officials there also are acknowledging that taxpayers may never get fully back paid on the deal.

In the most far-reaching intervention into the private sector ever for the Federal Reserve, the government stepped in Tuesday to rescue American International Group Incorporated with an $85 billion injection of taxpayer money. The government will get almost an 80 percent stake in the company.

White House spokeswoman Dana Perino said Wednesday that the harm to the taxpayer could be even higher if AIG were to fail.

She said taxpayers would be the first to be reimbursed for the bailout. But when asked whether taxpayers may not get paid back at all, she said "That is true."

(Copyright 2008 by The Associated Press. All Rights Reserved.)

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