♦ Fearing another massive corporate bankruptcy, the Federal Reserve agreed to an $85 billion bailout of the troubled insurance giant AIG. [NYT, WSJ, Fortune, NYP]
♦ AIG's CEO, Robert Willumstad, will be replaced by Edward Liddy, the former CEO of Allstate. [Marketwatch]
♦ AIG's ex-CEO Hank Greenberg is dismayed he wasn't involved in the bailout effort. Considering he's tangled up in about half a dozen lawsuits with his former company, that wasn't so surprising. [WSJ]
♦ Concern now seems to be focused on Washington Mutual: Federal officials have contacted Wells Fargo, JPMorgan, and HSBC to gauge their interest in a possible acquisition of WaMu. [NYP]
John Thain and two of his deputies stand to make $200 million for the year they've spent at Merrill. [Bloomberg]

♦ Barclays will pay a total of $1.75 billion for most of Lehman Brothers. Approximately 10,000 people will keep their jobs and Barclays will get the Lehman brand name and the firm's clients; it won't have to worry about assuming any of the liabilities that forced Lehman under, naturally. [WSJ]
♦ To counteract rumors, Morgan Stanley released earnings early, reporting a smaller-than-expected 7.7% decline in profit for the quarter. [WSJ, NYP]
♦ The British bank Lloyds TSB is in merger talks with HBOS, Britain's largest mortgage lender. [Dealbook]
♦ Samsung has made an unsolicited $5.85 billion cash offer for SanDisk, after acquisition talks failed to produce an agreement. [Dealbook]