BREAKING: NY Times says, "Bye, bye Wall Street." (updated)
by bobswern, Sun Sep 14, 2008 at 07:42:16 PM EDT
For all intents and purposes, the New York Times this evening, in the past hour, is calling for everything but the "D-word" today and tomorrow on the front page of its website as I write this. See: "In Frantic Day, Wall Street Banks Teeter."Developments on Wall Street have become that dire as the weekend has progressed. The front page of their website is that striking. It's certainly some of the most awful headlines I've seen there since 9/11/01. (Some would say--and I might agree with them--that the implications are far worse than 9/11/01, too.)
American International Group (i.e.: A.I.G. Insurance) is calling for an immediate, emergency $40-billion bailout from the U.S. Government. In lieu of that, it's now announcing a fire sale of some of its most important assets. Bye, bye A.I.G.
Lehman Brothers, one of the four remaining major investment houses on Wall Street will declare bankruptcy at the stroke of midnight, tonight. Bye, bye Lehman Brothers.
Merrill Lynch, one of the three remaining major investment houses on Wall Street, after Lehman announces its going under in the next half-hour (yes, this is not an exaggeration), is announcing a $44 billion buyout from Bank of America, a price which is less than half of its book value, per its financials from less than a year ago. Bye, bye Merrill Lynch.
Washington Mutual, the nation's largest Savings and Loan, is expected to follow suit, and will go into some form of receivership or bankruptcy, probably before the week's out. Bye, bye Washington Mutual.
National City and Fifth-Third Corporation, among (literally) hundreds of other regional and smaller banks are expected to follow suit. Bye, bye National City and Fifth-Third, and hundreds of other regional and smaller banks.
UPDATE: Getting practical about all of this, and filing it under "getting you coming and going," the failure of WaMu, alone, will eat up most of the remaining funds in the FDIC's (that's the Federal Deposit Insurance Corporation's) cash reserves. This is the entity that guarantees your bank accounts for the first $100,000 on account. Most of the remaining bank failures (and even the most conservative of estimates has that somewhere in the 1,000-bank range), will be paid for by the federal government--that's you and me--pouring hundreds of billions of dollars into the FDIC's coffers.