Edgy Wall Street waits for AIG plan
Written on September 15, 2008
American International Group looked to be at risk of becoming the latest victim of the biggest financial shake-up since the Great Depression as the insurer’s shares plunged as much as 71 percent on fears of credit losses.
AIG’s struggles followed the failure of frantic attempts to find a rescuer for investment bank Lehman Brothers Holdings Inc, and Merrill Lynch & Co’s agreement to be taken over by Bank of America Corp.
Reports said AIG, once the world’s largest insurer, had asked the Federal Reserve for an emergency loan over the weekend, and the company was now the focus of attention as it plotted a way out of a liquidity crisis caused by massive losses from guaranteeing bad mortgage investments.
U.S. stocks fell sharply across the board, but not as much as some expected, after one of the most turbulent days in Wall Street history no fax payday loans.
As a deepening crisis took new, bigger victims, the Fed said that for the first time it would accept stocks in exchange for cash loans, and 10 of the world’s top banks agreed to establish a $70 billion emergency fund, with any one of them able to tap up to a third of that.
The Dow Jones industrial average was down 2.4 percent in early-afternoon trading, while the Standard & Poor’s 500 Index lost 2.3 percent.
Lehman shares fell more than 90 percent to 26 cents.
The events signal a seismic shift in Wall Street’s power structure, with big name investment banks biting the dust and major banks like Bank of America and JPMorgan Chase becoming the survivors.
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