AIG record losses drag Dow to 12-year low

The huge losses caused the main Wall Street index to open below 7,000 points for the first time since 1997. Shortly after 2.30pm, the Dow Jones had shed 133.25 points (1.89%) to 6,929.68. Despite its troubles, AIG's shares rose 14% in early trading as the Federal Reserve announced a new bail-out plan. However, regulators warned the problems at AIG posed a system risk for the entire financial system, and bank shares were hit by the news. AIG's loss of $61.7bn during 2008, announced today, is the largest annual slump in corporate history. As a result of the disastrous figures, the world...