Whether or not the Fed has the authority to buy/lend to AIG, the story does not end there. In order to lend/buy, the Fed needs to come up with $85 billion, which is conveniently being supplied by the Treasury Department, which is in turn borrowing it from whoever will lend money to the U.S. government, to be paid back by us or our descendants, unless the AIG deal miraculously turns out to be profitable. On what statutory authority does Treasury Act? Unlike the Fed, the Treasury does not bother to explain where its authority comes from in its press release and I have found no other sources with this information. Does anyone know? A U.S. Code section would be a nice place to start.