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A Lifeline for AIG From State

Federal Reserve officials were in urgent talks with Goldman Sachs and JPMorgan Chase on Monday to put together a $75 billion lending facility to stave off a crisis at the American International Group, the latest financial services company to be pummeled by the turmoil in the housing and credit markets.

The talks, which began last week and continued through the weekend, added to the sense of agitation in the stock market Monday, as investors grappled with the implications of the bankruptcy of Lehman Brothers, which, like AIG, was a large counterparty to derivatives contracts held by countless financial institutions.

Shares in AIG tumbled more than 60 percent on Monday morning as concerns grew that the firm lacked capital to withstand cuts to its debt rating, which appeared imminent. The company’s potential write-offs are mounting and may ultimately reach $60 billion to $70 billion, according to two people briefed on the situation.

The day started off with news that AIG had requested a $40 billion bridge loan from the Fed, a request that was rebuffed, and ended with the word that its need had soared to $75 billion. The firm suffered several ancillary credit-rating downgrades during the day, but as of Monday night had not seen its main debt ratings cut by Standard & Poor’s or Moody’s.

HP to Cut 24,000 Jobs After Merger

The computer and printer maker Hewlett-Packard announced on Monday that it would eliminate 24,600 jobs, or 7.5 percent of its work force, as part of its plan for digesting Electronic Data Systems, the computer services giant that HP acquired for $13.9 billion in August.

“I think most of you that follow us know I am a big believer that having the most efficient cost structure directly relates to your ability to scale and grow,” Mark V. Hurd, HP’s chief executive, told securities analysts gathered at a hotel here, near San Francisco’s airport.

Almost half of the job cuts will occur in the United States. The company, based in Palo Alto, Calif., expects the reorganization to result in annual cost reductions of nearly $1.8 billion. Hewlett said it would record a $1.7 billion charge in the fourth quarter tied to the layoffs.

The layoffs are the start of a three-year plan in which HP will try to unify its existing services business with EDS. Up to half of the eliminated positions may be refilled over the course of the reorganization, HP said.

Art Auction Attracts Plenty of Bidders, Despite Financial Turmoil

Against a backdrop of reeling financial markets and nervous investors, Sotheby’s and the British artist Damien Hirst forged ahead with “Beautiful Inside My Head Forever,” a highly publicized auction of 223 works, all by Hirst and all made within the last two years.

In a gamble that could have ramifications for other artists, Hirst was bypassing his dealers — the Gagosian Gallery, based in the United States, and White Cube, based in London — and taking his work straight to auction with a sale that began here on Monday night and concludes on Tuesday afternoon.

And there were signs that the bet was paying off: The first session’s total was $127.2 million, above the high estimate for the entire sale, $112 million.

“I woke up this morning in the teeth of the gale of recession,” Hirst’s business manager, Frank Dunphy, said after the sale, “but we came out as confident as ever.”