There's a lot of frustration now that financial services firms are repeatedly hitting up Uncle Sam for more taxpayer money. All these government programs, at some point, seem to be redressing the same wounds. But in the case of AIG specifically, what else is there to do? It would be a catastrophic financial event if the company were to fail. The ramifications would be felt most heavily in Europe but they would ripple across the globe. The United States would not be spared, so the government pretty much has to do something. Unfortunately, it is getting sucked into more ownership and TARP injections, in what appears to be a piecemeal effort.

The latest TARP injection, in response to an expected $60 billion loss, is not likely to be the definitive solution. The fact is that the economy around the globe is worsening, and the CDS market is not likely to stage a recovery anytime soon. So what to do? The government already owns 80 percent of the holding company. Will it take the risky step of insuring against losses on its CDS?  

For more:
- here's the Reuters article