The Federal Reserve Board will provide as much as $37.8 billion in additional liquidity to American International Group Inc.'s regulated insurance subsidiaries after rescuing the company with an $85 billion loan last month.

The Fed board used emergency powers to authorize the Federal Reserve Bank of New York to borrow up to $37.8 billion in investment-grade, fixed-income securities from AIG in return for cash collateral, the Fed said. The action will help AIG "replenish liquidity" and provide "enhanced credit protection to the New York Fed and U.S. taxpayers," the central bank said.

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