AIG: Another Gummint Problem? UPDATED

Two different reports.

First, that AIG will become a "conservatorship" of the Federal Gummint (whatever the Hell that actually means.)

Second, that the Fed will pop a $75BILLION loan to AIG.

UPDATE: McArdle reports: In an extraordinary turn, the Federal Reserve agreed Tuesday night to take a nearly 80 percent stake in the troubled giant insurance company, the American International Group, in exchange for an $85 billion loan.
The Federal Reserve and Goldman Sachs and JPMorgan Chase had been trying to arrange a $75 billion loan for the company to stave off the financial crisis caused by complex debt securities and credit default swaps. The Federal Reserve stepped in after it became clear Tuesday afternoon that the banking consortium would not be able to complete the deal.

Without the help, A.I.G. was expected to be forced to file for bankruptcy protection.

Pardon me, but what friggin' LEGAL AUTHORITY does the Fed have for that action?

By the way:

The "Big 3" (GM, FoMoCo, and Xler) are looking for $25Bn in Gummint loan-guarantees, too.