People awoke this morning to the news that the government is investing another $40 million, via TARP, in troubled AIG. That brings the total bailout to $150 million, far more then the government has ever put into a single company, the New York Times notes. The move is a stark admission that not only did the initial bailout moves not work, they actually hurt the company, sticking it with high interest payments and forcing it into an asset firesale. The government also said it will spend an additional $30 billion to buy up ailing collateralized debt obligations that AIG had disastrously insured. Such securities will be shifted to off-balance sheet entities and will not require massive collateral to be put up. This is an example of how the bailout is not a slam dunk, and despite the billions of dollars, success isn't guaranteed.

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