‘splain
I would love it if there was someone who could explain what this is in simple terms so even a dummy like myself could understand.
This is the amount that sellers of credit default protection on Lehman Brothers Holdings will be forced to pay those who bought those CDS (credit default swaps) as protection. Now Lehman is history, they need to pay up. Ergo, this is very likely to include AIG which sold a good deal of those swaps. I believe around 300 or so banks and investors signed up to settle these Lehman-associated CDS.
As far as what it means for the banks, insurance companies and hedge funds which sold these CDS and are now required to pay; they'll likely need to sell assets in order to meet their bills. The total cost is estimated around $270 billion.