Word: aig
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...What doomed AIG was the rating agencies' decision - they had suddenly awakened to AIG's problems - to sharply downgrade the firm's securities. That gave AIG no time to react, no time to raise more capital, no more time to do anything else but beg for help. Because AIG is in a much scarier situation than Lehman - the insurer has assets of $1 trillion, more than 70 million customers and intimate back-and-forth dealings with many of the world's biggest and most important financial firms - Uncle Sam felt that it had no choice but to intervene...
...Additional photo credits -- Paulson: AP; AIG Ticker: Andrew Harrer / Bloomberg / Landov; Lehman: Getty; Federal Reserve Bank of New York: AP; Foreclosure: AP; AIP sign: Getty; Dow Jones...
...wake of the government's unprecedented take-over of insurance giant AIG, the shares were punished. Mack got in touch with the chairman of the Securities and Exchange Commission and the Treasury Secretary, and then sent out an e-mail to employees: "It's very clear to me," he wrote, "we're in the midst of a market controlled by fear and rumors, and short sellers are driving our stock down...
...Sept. 17 was a fearful day, that's for sure. The $85 billion lifeline the government threw to AIG may have prevented a total meltdown, but the Dow industrials still finished 449 off points for the day. The price of gold shot up by about $80 an ounce and the yield on the three-month Treasury bill maturing Dec. 18 dropped to 0.04% - from 0.68% the day before. "It's a total flight to quality, which points to the sheer panic that's out there," says S&P Equity Research strategist Alec Young...
...vultures, rumor mongers, cheats and criminals. But they have not, by and large, been wrong in their choice of targets. Bear and Lehman died because they were undercapitalized. Merrill's own mismanagement helped to chase it into the arms of B of A. Yet in the case of AIG, the argument is that the company would have remained afloat had its stock price not been driven down, which triggered a credit downgrading that then required AIG to raise $14 billion in capital overnight to meet collateral requirements on its credit default swaps...