In which the government goes into the Insurance business

Congratulations! It's a basket case!

The Feds have just announced that they will borrow $80b from the Chinese to take over AIG. I'll spare you the details and cut to the chase:

Reports Tuesday said the Fed was considering a conservatorship for AIG—which would mean bringing in an outsider to run the company. But sources told CNBC that no legal authority exists for such an arrangement.

Why should that be an issue?

(picture hat tip: DL)