Tag Archives: AIG

Bailouts of Americas Crumbling Banks Bloodbath Panic Selling

The government abruptly announced an $85 Billion USD Federal Reserve Loan to BAILOUT insurance giant AIG. AIG FP lost more than $10 billion in 2007, and $14.7 billion in the first six months of 2008. AIG agrees to repay the loan with asset sales and give the government a 79.9% equity stake in the company.

The financial sector in the USA is facing a huge crisis. When you have two big companies like Bear Stearns and Lehman Disappear, and Merrill Lynch being absorbed, that tells you volumes about the difficulties being faced by the financial sector in America. It has become a field day for short sellers, who are picking off the undercapitalized financial outfits.

After turning down a shot at buying all of Lehman Brothers over the weekend, British bank Barclays just picked up the core of the USD $4 Billion investment bank for $250 million. Barclays also bought Lehman’s New York headquarters building and a couple of data centers for USD $1.5 Billion. The buildings cost six times more than the whole bank itself: 

BARCLAYS PRESS RELEASE:

The Board of Barclays announces that Barclays has agreed, subject to US Court and relevant regulatory approvals, to acquire Lehman Brothers North American investment banking and capital markets operations and supporting infrastructure. The transaction will create a premier integrated global bulge bracket investment banking company with a leading presence in all major markets and across all major lines of business including: equity capital markets, debt capital markets, mergers and acquisitions, commodities trading and foreign exchange.

 

Barclays will acquire trading assets with a current estimated value of £40bn (US$72bn) and trading liabilities with a current estimated value of £38bn (US$68bn) for a cash consideration of £0.14bn (US$0.25bn). Barclays will also acquire the New York headquarters of Lehman Brothers as well as its two data centres at close to their current market value.

Leave a comment

Filed under American Economy, Dead, Finance, Loser, Ron Paul Revolution, Self Help, US Politics, Wall Street DowJones, World Events

Wall Street Worst Day in 7 Years Black Monday Lehman AIG ML

 Wall Street had its worst day down 504 points, Black Monday, since after the September 11 attacks as financial instability surged after Lehman Brothers filed for bankruptcy

and insurer AIG struggled for survival while Merrill Lynch ML accepted a takeover bid from Bank of America. Bank of America has aggressively expanded to become the second largest bank in the US, by assets, after Citigroup. If the acquisition of Merrill, the world’s largest brokerage goes through, Bank of America is likely to take over as the new king of the banking world.

A sharp slide in oil prices to below $100 a barrel helped cap the stock market’s losses.

It doesn’t really matter anymore what’s happening in the real world. What matters is the psyche of the people driving stock prices – large institutional and short sellers who move the markets far and fast.

As concerns about the insurer AIG’s scramble for capital mounted, the Wall Street Journal reported that the U.S. government has asked Goldman Sachs and JP Morgan Chase  to lead a lending of $70 billion to $75 billion for AIG.

Live Longer – Retire Stronger – Move to Thailand

New York City Mayor Michael Bloomberg said “New Yorkers have gotten through the ups and downs of Wall Street before, and we will get through this one, too. We know how to make tough decisions, we know how to come together, and we know how to emerge a stronger city as a result.”

By acquiring Merrill, Bank of America gained a major position in the investment management business and the ability to move into overseas markets.

Earlier this year Bank of America bought out Countrywide Financial, a giant lender often blamed for pushing many of the risky loans that started the housing crisis. It was a risky acquisition for Bank of America because it took on some bad loans, but at the same time it gained a much larger long term foothold in the lucrative mortgage business.

And that growth just continues now with Merrill Lynch.

Leave a comment

Filed under Dead, Finance, Loser, Self Help, US Politics, World Events