AIG is taking losses on bad paper bets with other companies and people.
The risk is that AIG goes bankrupt. If AIG goes bankrupt, then they write off the dept from those bad bets, and so those that took the other side of those bets with AIG won't ever see their winnings, and so they have to write it off (and potentially go bankrupt).
So, it's not so much that the US is propping up the company AIG, it's that the US Government is propping up those that made bets with AIG. I think they're called counterparties.
There are Trillions of Dollars on the line. Some of it is betting on economic destruction, and some is betting on growth. Recently, the only winners have been those betting against. We need to make sure that we get back to growth ASAP IN SPITE of those that are profitting off of our destruction.