Fed forced to drop tough loan rules to save AIG

The Federal Reserve has had to relax the terms of its support to American International Group (AIG) in its latest bid to save the world's largest insurer.

The Fed on Monday moved to prop up the ailing insurer by easing the conditions of a $60 billion chunk of its $112.5 billion credit line with the New York Federal Reserve.

The news comes after the insurer announced losses of $61.7 billion for the fourth quarter of last year, the highest in American history.

The move sees the Fed cancel a por