A.I.G. Seeks $40 Billion in Fed Aid to Survive
The American International Group is seeking a $40 billion bridge loan from the Federal Reserve, as it faces a potential downgrade from credit ratings agencies that could spell its doom, a person briefed on the matter said Sunday night. ...After Frantic Day, Wall St. Banks Falter
In one of the most dramatic days in Wall Street?s history, Merrill Lynch agreed to sell itself on Sunday to Bank of America for roughly $50 billion to avert a deepening financial crisis, while another prominent securities firm, Lehman Brothers, said it would seek bankruptcy protection and hurtled toward liquidation after it failed to find a buyer.And this just posted:
Lehman to File for Bankruptcy After Suitors Drop Out (Update1)
Sept. 15 (Bloomberg) -- Lehman Brothers Holdings Inc., once the fourth-largest U.S. investment bank, will file for bankruptcy after potential buyers abandoned talks and the U.S. government declined to fund a takeover of the crippled firm.Does that mean THESE dire consequences will come to fruition?
Roubini (on Saturday): It is now clear that we are again ? as we were in mid- March at the time of the Bear Stearns collapse ? an epsilon away from a generalized run on most of the shadow banking system, especially the other major independent broker dealers (Lehman, Merrill Lynch, Morgan Stanley, Goldman Sachs). If Lehman does not find a buyer over the weekend and the counter parties of Lehman withdraw their credit lines on Monday (as they all will in the absence of a deal) you will have not only a collapse of Lehman but also the beginning of a run on the other independent broker dealers (Merrill Lynch first but also in sequence Goldman Sachs and Morgan Stanley and possibly even those broker dealers that are part of a larger commercial bank, I.e. JP Morgan and Citigroup). Then this run would lead to a massive systemic meltdown of the financial system.With this, can we finally just admit that Milton Friedman and the last few decades of free marketeering rest on the shoulders of the taxpayers and treasury of what we now rightly should call the Soviet States of America?
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