The U.S. Federal Reserve is reconsidering a bridge loan to American International Group, Bloomberg News is reporting.

Citing "a person familiar with the negotiations", Bloomberg said the U.S. government is backtracking on earlier rhetoric suggesting there would be no bailout. The source declined to be identified but said they are "cautiously optimistic" there will be government intervention.

The source declined to speculate on the size of a loan or offer a timetable.

Earlier, CNBC reported something along similar lines.

By Adam Button and edited by Stephen Huebl
©CEP News Ltd. 2008