US insurance giant AIG raced against the clock to avert collapse Tuesday after three blows to its credit standing, and central banks pumped out 160 billion dollars to prop up financial markets.
AIG was at risk of following Lehman Brothers into bankruptcy despite approval for it to borrow 20 billion dollars and as report said the Federal Reserve had asked two banks to help provide 70-75 billion dollars.
Markets, investors and savers around the world focused on AIG to see if it would be the next failure in the firestorm from the shocks on Wall Street on Monday, when another investment bank Merrill Lynch was bought out of trouble by Bank of America.
Economist Jeffrey Sachs of Columbia University warned: "There is more ahead. The US economy is definitely going into recession ... There's more financial turmoil ahead."
Stock markets fell for a second day on widespread recognition that the financial crisis is the worst since the crash of 1929. The fall in Europe was smaller than on Monday but Asia markets plunged and bank shares everywhere were showing big losses.