AIG, the troubled insurer that sits at the heart of the financial system, on Monday had its key credit ratings cut, potentially triggering billions of dollars of collateral payments on its many derivatives trades.

The ratings cuts came after US authorities moved to fight this latest fire in the crisis on Wall Street, throwing a $20bn lifeline to AIG, while the Federal Reserve in New York was hosting a fresh set of crisis talks to come up with some kind of private sector funding facility for the insurer.