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AIG and Washington Mutual soon to follow Lehman Brothers down the drain?

while-you-were-outTo put things in perspective, it helps to know that Lehman Brothers holdings were 10 times the value of Enron’s, a company that also fell into bankruptcy amidst scandal. But the collapse of the American economy is not over yet, as other companies, such as Washington Mutual and AIG also appear to be on their way to going under. Here is what wikipedia has to say about AIG, the 18th largest company in the world, and one that in 2006 was fined over 1.5 billion dollars for fraud.

‘On June 15, 2008, under intense pressure due to financial losses and a falling stock price, Martin Sullivan resigned from the CEO position. He was replaced by Robert B. Willumstad who has served as Chairman of the Board of Directors of the Company since 2006.

In 2008, AIG’s share prices fell over 95% to less than $3 in September and the company reported over $13.2 billion in losses in the first six months of that year. As Lehman Brothers suffered a major decline in value and share price, potential investors began to compare the types of securities held by AIG to those held by Lehman, and found that AIG had valued their Alt-A and sub-prime mortgage-backed securities at rates 1.7 to 2.0 times those Lehman had used for what Lehman officials called similar securities. On September 14, 2008, AIG announced it was considering selling its aircraft leasing division, International Lease Finance Corporation, in an effort to raise necessary capital for the company. The Federal Reserve has hired Morgan Stanley to determine if there are systemic risks to a failing AIG, and has asked private entities to supply short-term “bridge” loans to the company. In the meantime, New York regulators have approved AIG for $20 billion in borrowing from its subsidiaries.

On September 16, AIG’s stock dropped 60 percent at the market’s opening. The Federal Reserve continued to meet that day with major Wall Street investment firms to broker a deal to create a $75 billion line of credit to the company. Rating agencies Moody’s and Standard and Poor’s, meanwhile, downgraded their ratings on AIG’s credit on concerns over continuing losses to mortgage-backed securities. The New York Times later reported that talks on Wall Street had broken down and AIG may file for bankruptcy protection on Wednesday, September 17.’

Will this company in fact file for bankruptcy tomorrow as the NYT reports? And what about Washington Mutual and the others? It’s beginning to look like the 30’s once again, and all doubt about ‘recessions’ or not is now over. The word is DEPRESSION. Hang onto your job, house, and pension if you can, for it looks grim.

3 thoughts on “AIG and Washington Mutual soon to follow Lehman Brothers down the drain?

  1. Yesterday was not a good day on Wall Street. NASDAQ stocks plunged $130 billion in value. NYSE stocks plunged another $940 billion. Thats more than ONE TRILLION DOLLARS in losses a mind-blowing $1,070,000,000,000 of invested wealth vanishing into thin air in a single session.

    Que sera, sera.

  2. Well that was quick. The Feds threw $85 billion good dollars of our taxpayer money onto bad debt as a bailout loan for AIG. Now who’s going to bailout the Feds?

  3. That was my thought, you know, when it was reported that We The People get an 80% share in a drowning company.

    Then realization sinks in that it’s only a penny on the dollar for that share.

    Then it’s sadness time again when you compare it apples to apples.

    it’s like buying spoiled meat at a penny on the dollar.

    “Oh, look, I bought a Whole Steer for only a hundred bucks!”

    It’s just we’re going to need a couple hundred gallons of ketchup and Tabasco sauce, and tell the guests that the maggots are just extra protein.

    Yum, Yum!

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