Wow. The financial markets are certainly interesting these past couple of days. It's like watching 9/11 but being financial markets instead. The question really is where will it end? I don't think it's over yet. People will not be looking at financial companies and rating companies the same for the near to medium future.
From www.nytimes.com
From www.nytimes.com
Under the plan, the Fed will make a two-year loan to A.I.G. of up to $85 billion and, in return, will receive warrants that can be converted into common stock giving the government nearly 80 percent ownership of the insurer, if the existing shareholders approve. All of the company’s assets are being pledged to secure the loan. Existing stockholders have already seen the value of their stock drop more than 90 percent in the last year. Now they will suffer even more, although they will not be totally wiped out. The Fed was advised by Morgan Stanley, and A.I.G. by the Blackstone Group.
Fed staffers said that they expected A.I.G. would repay the loan before it comes due in two years, either through the sales of assets or through operations.
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