The news that AIG had asked the Federal Reserve to provide a bridge loan worth tens of billions set teeth gnashing everywhere across the universe of market watchers. The now time worn phrase moral hazard was trotted out. Weren't we supposed to be clawing our way out of this bailout business?
Our first reaction to the news that the insurance titan had gone hat in hand to the House of Bernanke was to ask: can they do that? We had fallen under the impression that the Federal Reserve lent money to banks, and more recently to investment banks. But we didn't think the Fed was in the business of bailing out insurance companies.
It turns out we were wrong. The Fed is authorized by Depression era amendments to the Federal Reserve Act to lend to pretty much anyone, as David Zaring at the Conglomerate points out. So long as the circumstance are "unusual or exigent" the Federal Reserve may open the discount window to any individual, partnership, or corporation.
Lately we've been feeling that our own finances are a bit unusual and exigent but somehow we doubt that the Fed is going to allow us to borrow from the discount window. Maybe AIG will have better luck.
Who Can Access the Fed's Discount Window? [Conglomerate]
Posted by guest , Sep 15, 2008 2:02PM
nigga plz
fck AIG LEH MAYO RULES
Posted by guest , Sep 15, 2008 2:03PM
Didn't Paulson just say, "no dice" to AIG loan?
Posted by guest , Sep 15, 2008 2:04PM
Excellent. I have a bunch of IOUs from deadbeat friends that I've been looking to borrow against.
Posted by guest , Sep 15, 2008 2:07PM
http://cgi.ebay.com/ws/eBayISAPI.dll?ViewItem&ssPageName=STRK:MESELX:IT&item=320299692197
Posted by guest , Sep 15, 2008 2:08PM
The one good thing about this weekend (aside from JC's great job keeping everyone up to date) was the lack of retail brokers on this site and the "mayo" comments. Of course, it's Monday, so they are back to work...
Posted by guest , Sep 15, 2008 2:09PM
The fed window is never going to close.
Posted by guest , Sep 15, 2008 2:12PM
#5 - very true
Posted by guest , Sep 15, 2008 2:15PM
waiting for AIG to be given permission to pledge 787 purchase contracts as collateral.
Posted by guest , Sep 15, 2008 2:15PM
#4 Go Blue devils!
Posted by guest , Sep 15, 2008 2:17PM
So what about Wachovia?
Posted by guest , Sep 15, 2008 2:18PM
WHAT IS MAYO?!?!?!?
Posted by guest , Sep 15, 2008 2:25PM
noticed comments about wachovia and GS..
do we have to worry about them too?
Posted by guest , Sep 15, 2008 2:34PM
can I borrow against the future cash flows of my sperm?
Posted by guest , Sep 15, 2008 2:36PM
retail saved MER from BK, prob saving thousands of jobs.
of course, that deal is head-fake #27.
anywhoski, retail is pretty idiotic, otherwise.
so. . . no puts in your secret etrade accts?
should i sell my GS 120s pre-earnings?
oops just did.
carry on analyzing and holding.
-retail
Posted by guest , Sep 15, 2008 2:39PM
@5,
Question: Mighty Putty or Shamwow?
https://www.mightyputty.com/spark/index.php?tag=mpedseag100
Posted by guest , Sep 15, 2008 2:40PM
Too long, didn't read.
Posted by guest , Sep 15, 2008 2:42PM
@5, I think you hurt their feelings....
Posted by guest , Sep 15, 2008 2:44PM
Just read on dealbook that lehman employees may get 6-9 months severance. how is this possible in a bankruptcy situation?
Posted by diablo , Sep 15, 2008 2:44PM
Thanks to Carney for holding the fort this weekend. Great job! He even got half a scoop, or something.
Posted by guest , Sep 15, 2008 2:45PM
@diablo...what, that b of a was going to buy most of the bank, with barlays etc getting the rest?
Posted by guest , Sep 15, 2008 2:48PM
@diablo - absolutely!! JC did a great job... It was amazing that the MCM ignored this story until about 9pm when CNBC came on. Nice job, DB.
Posted by guest , Sep 15, 2008 2:52PM
@14- WOW!! YOU SAVED MER!! NICE JOB!! All by yourself... You must look in the mirror and stare in awe...
Posted by guest , Sep 15, 2008 2:59PM
Merrill (MER) and Bank of America (BAC) To Fire 20,000+ (MER, BAC)
Sep 15, 08 9:46 AM
Merrill Lynch (MER) and Bank of America (BAC) say merger savings will total $7 billion. We estimate that this means at least 20,000 people will be fired.
Our Assumptions:
* $5 billion of the $7 billion is compensation costs (the rest is real estate)
* $250,000 average compensation per employee
Add in the Lehman axings too.
Posted by Investorcluzo , Sep 15, 2008 3:06PM
@10/12 - won't rehash the analysis from last night (you can read the post at your leisure if you are so inclined), but the basic problem with watchovaya is the $122 billion dollar portfolio of pick-a-pay mortgages (a toxic lot). this represents 25% of their total loan portfolio and roughly half of their consumer book. the assumption that we have not seen the top of the default rates yet suggests a) wb has more pain to come by way of write downs and b) will likely need to raise capital diluting shareholders. then we have the whole level III situation...with the stock down 22% it appears that the little campers are getting restless.
Posted by guest , Sep 15, 2008 3:18PM
ALL CAPS @ 22!!
screaming is never the answer.
but, it's okay to cry.
-retail
Posted by guest , Sep 15, 2008 3:33PM
is it fair to say NYC is no longer the financial capital of the world? is the sun setting? or has the sun set on US economic hegemony?
Posted by guest , Sep 15, 2008 3:34PM
The fed is running out of silver bullets. Credibility had been gone 12 months now. . .
Posted by guest , Sep 15, 2008 3:41PM
Borrowing from the Fed is like using a sham-wow.
Posted by guest , Sep 15, 2008 4:04PM
@28 Nice! well done
Posted by guest , Sep 15, 2008 5:39PM
@ #5 instead we has the ebay dope. granted not as annoying. but last night at around midnight i would have shoved the ebay dude out an open window. these days i am finding violence works (so does scotch and valium)
Posted by guest , Sep 15, 2008 5:40PM
@ #5 instead we has the ebay dope. granted not as annoying. but last night at around midnight i would have shoved the ebay dude out an open window. these days i am finding violence works (so does scotch and valium)
Posted by guest , Sep 16, 2008 7:49AM
Dear Ben,
I am stupid fool like AIG management, I am loaded up with home equity loans and am running out of cash. If you decide to help AIG, please help me as well.
Sincerely,
Average Joe
Posted by guest , Sep 17, 2008 12:10AM
"The Markets They Are A-Changin'"
(to the melody by Bob Dylan)
Come gather round 'bankers'
Wherever you roam
And admit that the waters
Around you have grown
And accept it that soon
You'll be told to go home
If your job to you
Is worth savin'
Then you better start swimmin'
Or you'll sink like the DOW
For the markets they are a-changin'.
Come hedgefunds and bear traders
Who prophesize and sell short
And keep your eyes wide
The chance won't come again
And don't speak too soon
For the markets still in spin
And there's no tellin' who
That it's namin'
For the markets they are a-changin'.
Come senators, congressmen
Please heed the call
Don't stand in the doorway
Don't block up the hall
For he that gets hurt
Will be he who has stalled
There's financial meltdown outside
And it is ragin'
It'll soon shake your windows
And rattle your walls
For the markets they are a-changin'.
Come Central Bankers
Throughout the land
And don't criticize
What you can't understand
Those OTC derivative books
Are beyond your command
The old road is
Rapidly agin'
Please get out Bernanke and Paulsen
If you must bail out your friends
For the markets they are a-changin'.