The Federal Reserve meets and keeps the federal funds rate unchanged at 2%. Asian markets, some of which had been closed for a holiday on Monday, plummet.
The Russian stock market goes into a tailspin, with the largest exchange down more than 17 per cent before the Russian government halts trading. Managers of the Primary Fund, a supposedly supersafe money market fund, say that shares have fallen below the sacrosanct $1 valuation.
Meanwhile, Goldman Sachs and Morgan Stanley, the two remaining independent investment banks, report stronger-than-expected results. However, investors continue to beat down the companies' shares.
Amid all the turbulence, US officials decide that AIG is indeed "too big to fail." In a move that would have been unthinkable before the credit crisis began, the Fed arranges to lend $85 billion to AIG in exchange for a 79.9 per cent equity stake.
The deal is announced Tuesday evening. Even before the deal is finalised, the Dow reverses an earlier loss and gains 141 points.
Image: Morgan Stanley headquarters in Times Square | Photograph: Mario Tama/Getty Images
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