No federal power for AIG conservatorship: source

WASHINGTON (Reuters) - A U.S. government source said on Tuesday that no federal agency has legal authority to place troubled insurance company American International Group Inc (AIG.N) under conservatorship.

Late on Tuesday, Bloomberg News reported that one option of U.S. authorities was to put AIG under control of a conservator, as the government did earlier with mortgage finance companies Fannie Mae and Freddie Mac.

Insurance companies, however, are typically regulated by states, not by federal agencies, so legal authority to put AIG under conservatorship doesn't rest with federal authorities, the source said.

(Reporting by Glenn Somerville; Editing by Leslie Adler)