WASHINGTON -- Oregon officials tried to reassure investors and customers Tuesday as the American International Group got an $85 billion emergency loan from the U.S. government to rescue the huge insurer.

The Federal Reserve said in a statement it determined that a disorderly failure of AIG could hurt the already delicate financial markets and the economy.

It also could "lead to substantially higher borrowing costs, reduced household wealth and materially weaker economic performance," the Fed said.

"The President supports the agreement announced this evening by the Federal Reserve," said White House spokesman Tony Fratto. "These steps are taken in the interest of promoting stability in financial markets and limiting damage to the broader economy."

Treasury Secretary Henry Paulson said the administration was working closely with the Fed, the Securities and Exchange Commission and other government regulators to "enhance the stability and orderliness of our financial markets and minimize the disruption to our economy."

The Fed said in return for the loan, the government will receive a 79.9 percent equity stake in AIG.

On Tuesday, shares of the insurance company swung violently as rumors of potential deals involving the government or private parties emerged and were dashed. By late Tuesday, its shares had closed down 20 percent -- and another 45 percent after hours. Still, no deal emerged.

The problems at AIG stemmed from its insurance of mortgage-backed securities and other risky debt against default. If AIG couldn't make good on its promise to pay back soured debt, investors feared the consequences would pose a greater threat to the U.S. financial system than this week's collapse of the investment bank Lehman Brothers.

The following statement was issued Tuesday by the Insurance Division of the Oregon Department of Consumer and Business Affairs:

Salem, Ore -- Despite financial issues facing American Insurance Group (AIG), AIG insurance companies are solvent and have the capability to pay claims, the Oregon Department of Consumer and Business Services Insurance Division said today. Anyone covered by AIG insurance companies can expect their claims to be paid as usual.

As a holding company, AIG is a separate, federally regulated legal entity that is distinct and apart from its subsidiary insurers. The subsidiary insurers are governed by state laws designed to protect the interest of policyholders. The Insurance Division monitors AIG insurance companies and any other company that is licensed to transact insurance in Oregon to make sure it is financially sound and can pay claims.

“AIG’s insurance subsidiaries are healthy,” said Scott Kipper, Insurance Division administrator. “We are committed to protecting the interests of Oregon policyholders and will work with other state regulators to ensure the subsidiaries continue to have the ability to pay claims.”

Oregon insurance regulators are staying in close touch with their counterparts in other states to monitor developments relating to the holding company and their implications for the insurance subsidiaries.

For example, it is possible that some subsidiaries would be sold, which would require regulatory approval by the states where the subsidiaries are headquartered.

State regulators have numerous actions they can take to prevent an insurer from failing, and claims from individual policyholders are given priority over other creditors in these matters. If an insurer does become insolvent, then in the unlikely event that assets are not enough to cover claims, consumers still are protected by state guaranty funds.

AIG provides a range of insurance products in Oregon including, property, casualty, auto, workers’ compensation, life, and annuities.

Policyholders with questions can call the Insurance Division’s Consumer Advocacy Unit at 1-888-877-4894. Check www.insurance.oregon.gov for updates and more information.