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Fed Poised to Relinquish Crisis Tools It Used to Bail Out AIG

An employee grabs sheets of five dollar to be loaded into a machine at the Bureau of Engraving and Printing in Washington.
Photographer: Andrew Harrer/Bloomberg

The Federal Reserve plans to vote Monday on giving up the lending tools it used to rescue American International Group Inc. and Bear Stearns Cos. during the financial crisis after U.S. lawmakers restricted the central bank’s power to prop up failing firms.

Under the Fed’s revised authority, it would only be able to save firms in a broad-based scenario, meaning it must rescue at least five entities at the same time, according to a statement released by the central bank. The change is meant to prevent the Fed from bailing out a single company.