WASHINGTON — Fearing the shutdown of the nation's largest insurer, the Federal Reserve lent AIG $85 billion and gave the government a substantial stake in the company.

The loan is secured by AIG's assets and if the company recovers taxpayers could make a great deal of money. The government now has a $79.9% equity stake in the firm.

"This loan will facilitate a process under which AIG will sell certain of its businesses in an orderly manner, with the least possible disruption to the overall economy," the Fed said in a statement.

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