As are most exchange traded funds (ETFs) representing sectors and global areas of the market, financials continue to take hits as the effects of the bailout plan are slow to be seen.

American International Group (AIG) has used $90.3 billion of a U.S. government credit line since it was bailed out last month, reports Hugh Son for Bloomberg. The amount exceeds to size of the original loan meant to save the company. The insurer’s latest balance was revealed yesterday, and it’s up from $82.9 billion from a week ago. CEO Edward Liddy said AIG may need more money, but that they ultimately “should be okay.”

Goldman Sachs (GS) announced that it’s cutting 10% of its work force, says Stephen Bernard for the Associated Press. Its staff was at record-high levels at the close of the third quarter, so it will be scaled back to nearly the 2006-2007 levels. The cuts are a direct result of the current environment.

Goldman has been largely believed to be among the best-performing banks throughout the credit crisis. During its fiscal third quarter ending Aug. 31, however, their profit fell 71%. That performance still outranks most of its competitors.

Dawn Kopecki for Bloomberg reports that Fannie Mae and Freddie Mac have an “effective” guarantee from the government, but are not backed by its full faith and credit. Federal Housing Agency Director James Lockhart  and Treasury Secretary Henry Paulson have been trying to quell doubts about the government’s commitment to stand behind the debt of the two mortgage giants. Lockhart says there’s $100 billion backing their equity provided by the U.S. Treasury.

The Financial Select Sector SPDR (XLF) is up 5.8% in the last two weeks, but down 29.3% in the last month. Goldman Sachs is 3.8% of the fund, while AIG is 3.4%.

Tags: Financial, Large-Cap, Sector ETFs, XLF