I was wrong by 12 hours or so. The Federal Reserve will make an $85 billion loan to AIG in exchange for warrants that would give the government an 80% stake in the company (a warrant is a contract issued by a firm that gives the right to purchase shares -- it is like a call option, but not traded on exchange). The government had to act to prevent the firm from going bankrupt. See this article, which notes that the agreement does not require a shareholder vote.
The key problem is that AIG was the counterparty in a huge number of credit default swaps. It is important to note that these derivates are traded over the counter, rather than on an exchange. This means that there is no exchange that bears the risk of default of a party to the transaction. Instead it is the counterparty that is liable. Hence, if AIG were to go bankrupt there would be massive counterparty risks. See this article by Felix Salmon for more on this settlement risk. This is what apparently forced the hand of the government.
4 hours ago