AIG ( AIG) continues to bleed cash and is running out of time to sell off assets as vultures are waiting in the wings.

The insurance giant, as of Wednesday, had borrowed $72.3 billion of the $85 billion federal bailout facility. Additionally, it had used $18 billion of the Federal Reserve Bank of New York $37.8 billion securities lending facility. At this rate, AIG will run dry in eight weeks. According to interviews given by Mark Tucker, CEO of Prudential PLC ( PUK), the U.K. financial services company, which has insurance interests in the U.K., U.S. and Asia, is licking its chops waiting for the right moment to pounce.

AIG CEO Edward Liddy said in a PBS interview aired on Wednesday that the requirement for additional cash depends on "our ability to stop the bleeding." Liddy added "but it's also what happens in the capital markets. To the extent they continue to go down and we have to keep posting collateral. ... it's possible it may not be enough." This scenario was identified as a possibility two weeks ago and, if the government had not offered the securities facility, AIG would have already bled dry.

Prudential's approach is eerily similar to that of another British predator, Barclays ( BCS), which initially indicated interest in Lehman Brothers' assets only to withdraw. After Lehman failed, Barclays then moved in and picked off the best bits for a bargain price.

Prudential, however, has picked on a huge animal and there are many parts of AIG that have little appeal. AIG has been given a lifeline by the Fed and needs to use it before the requirement for more cash becomes a desperate plea.

The Fed did not enter into this transaction to do the right thing for the shareholders of AIG. The government said it acted because "a disorderly failure of AIG could add to already significant levels of financial market fragility and lead to substantially higher borrowing costs, reduced household wealth, and materially weaker economic performance." Since then, however, the markets have tanked on worldwide recession fears.

The Fed should act on behalf of the U.S. taxpayer and pressure AIG into taking action now and not delaying asset sales. The press release at the time of the initial bailout said "this loan will facilitate a process under which AIG will sell certain of its businesses in an orderly manner, with the least possible disruption to the overall economy."

AIG's director of public relations, Joe Norton, would not comment on the interest that Prudential has displayed in some insurance assets and made clear that unless a deal was signed there would be no comment forthcoming from AIG about any disposals. As time passes and the cash dwindles, however, the offer price from any buyer will drop. Prudential reportedly has already indicated that any interest is at a very early stage, and it appears that negotiations will not be hurried.

Cash is AIG's blood now, and it's provided by the Fed. The two credit facilities offered to AIG are not really comparable, nor are they linked together by anything other than the fact that AIG cannot raise funds from anywhere else other than the Fed at the moment because the company's credit in a poisoned credit world is considered toxic.

Norton said that with the $85 billion bailout fund "AIG is using the funds primarily for collateral obligations for the credit default swap portfolio and general corporate funding." The additional $37.8 billion facility is being used by the securities lending program that AIG operates as part of fulfilling the normal cash needs of the life insurance companies.

As the credit markets are trying to free up liquidity, the fear of a general worldwide recession is growing and adding to the downward pressure on the world's stock markets. This is hurting AIG by reducing values of collateral that AIG is shoring up with Fed cash. At the same time, the value of investment-grade bonds is dropping, reducing the ability of AIG to raise cash, even from the Fed. This is putting severe pressure on AIG's ability to operate freely.

On Oct. 9, according to Norton, AIG only had $37.2 billion in assets available for the securities program. The third-quarter results will give an indication of how bad things were at the time the Fed stepped in. They will show the writedowns AIG has taken and provide an indicator of the maximum amount of cash that can be raised.

Norton would not disclose the date that AIG will release the earnings report. If AIG announces that the results will be published on Nov. 4 or 5, perhaps taking a leaf from the political handbook, it could be seen as a sign of extremely bad news that could be covered overlooked by the excitement of the presidential election.

Nothing concrete has emerged on AIG's asset-disposal program aside from the key appointment on Thursday of Paula Rosput Reynolds as vice chairman and chief restructuring officer with the direct responsibility of overseeing the divestiture of assets. Reynolds has little time to settle into the role as assets must be sold immediately.

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Gavin Magor joined TheStreet.com Ratings in 2008, and is the senior analyst responsible for assigning financial strength ratings to health insurers and supporting other health care-related consumer products, including Medicare supplement insurance, long-term care insurance and elder care information. He conducts industry analysis in these areas. He has more than 20 years' international experience in credit risk management, commercial lending and analysis, working in the U.K., Sweden, Mexico, Brazil and the U.S. He holds a master's degree in business administration from The Open University in the U.K.