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...backing. With Lehman headed for bankruptcy, Merrill Lynch was the next- most-vulnerable-looking Wall Street firm, so its CEO, John Thain, quickly inked a $29 a share sale to Bank of America that values Merrill at $50 billion. Meanwhile, AIG asked the Federal Reserve for a $40 billion loan to tide it over - a loan it seems unlikely...

Author: /time Magazine | Title: Financial Meltdowns: How Big a Blow? | 9/15/2008 | See Source »

...percent of peer investment groups as measured by the Trust Universe Comparison Service and far outpaces the group’s median return of -4.4 percent over the year. Financial markets have declined dramatically in the past 12 months as the effects of high rates of home loan defaults tore through the economy, wiping out billions in capital. Among the first casualties of the distress on Wall Street was Sowood Capital Management, a Boston-based hedge fund founded by ex-Harvard investment managers, that folded last July and took $350 million of Harvard’s money with it. Despite...

Author: By Clifford M. Marks and Nathan C. Strauss, CRIMSON STAFF WRITERS | Title: Harvard Bests Market Turmoil, Clocks 8.6 Percent Endowment Growth | 9/12/2008 | See Source »

...been telling people that it's way too soon to estimate this," says Bert Ely, a financial consultant based in Alexandria, Va., who delivered some of the most accurate estimates of the cost of the savings-and-loan crisis of the 1980s. The S&L experience is instructive: the cost estimates started low (Ely's first guess was $25 billion), then eventually grew to $500 billion. The actual price tag, as calculated by the Federal Deposit Insurance Corp. (FDIC) long after the fact: $123.8 billion, or about 2% of annual GDP during the bailout years. That's equivalent...

Author: /time Magazine | Title: With Fannie and Freddie, the US Is Bailout Nation | 9/11/2008 | See Source »

...just Frannie we're talking about here. There were also $29 billion in government loans behind Bear Stearns' shotgun marriage to JPMorgan Chase & Co. in March, although since they were made by the Federal Reserve--which can print its own money--it's not a direct cost to taxpayers. Then there are the $4.5 trillion in bank deposits insured by the FDIC. The first big bank bust of the current crisis, that of mortgage specialist IndyMac, cost an estimated $8.9 billion, leaving the FDIC with just $45 billion on hand to cover a likely rash of failures. But while...

Author: /time Magazine | Title: With Fannie and Freddie, the US Is Bailout Nation | 9/11/2008 | See Source »

...What should happen to Fannie and Freddie now? After the savings-and-loan industry imploded, Fannie and Freddie filled the resulting vacuum to become the country's dominant providers of mortgage funding. Earlier this decade, though, Fannie and Freddie were caught cooking the books and punished by regulators with restraints on their growth. Meanwhile, Wall Street firms began buying and securitizing hundreds of billions of dollars in subprime loans too dodgy to meet Frannie's underwriting standards...

Author: /time Magazine | Title: With Fannie and Freddie, the US Is Bailout Nation | 9/11/2008 | See Source »

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