Update: A Marquee firm files for Bankruptcy, US Govt bails out AIG

[Ram]

We will have to wait and watch how JPMC fares in the long run. Although a fair argument is that if JPMC tanks USA is doomed anyway as it is the 2nd largest bank and by most account the most prominent one since the number 1(BoA) has reached there by M&A and not exactly has a track record of being where it is.

JPMC is not an exclusive Investment Bank, like Lehmann Brothers or Morgan Stanley. They have a diversified line of Business that includes, Commercial Banking, Asset management, IB, Treasury services, Card services. So, they can have one of their arms perform badly, but sustain on the strength of the other parts of business. So, in that sense, they’re definitely better placed than other companies.

What would be interesting to watch is how does WaMu failure impact Indian companies. WaMu is a big account for many Tech giants' date=' notably CTS who has a large footprint in their Seattle HQ as also Loan quarters in California. Needless to say Lending is gonna be shut down but would the new acquisition mean curtains for consulting? Or would consultants be kept on and full time employees let go. It should be very interesting to watch...unless you work at a WaMu client site that is.[/quote'] The good news, WaMu is still there. But JPMC has said that it will talk with the ‘Business leadership of WaMu to decide on eliminating redundant job positions within the combined company. So, there’s bound to be some job losses. And undoubtedly, when people are being laid off, it’s the consultants who go first.

[Lurker]

BTW, I don't understand this grudge against CEOs earning tons of money.......whats wrong with them getting millions of dollars if someone is willing to pay them?

WaMu's CEO might walk away with 18 million $ for being in office for 3 weeks, essentially the last 3 weeks when the company went down under. Thats why people hate these CEOs. They shall walk away with millions and due to their (im)prudence I shall have to shell out 2500$ extra next year in taxes even though I had nothing to do remotely with subprime. http://money.cnn.com/2008/09/26/news/companies/fishman_wamu/index.htm?postversion=2008092613 Incidentally the other day Circuit City CEO walked away with 2 million $ inspite of being fired!! His renumeration included a full "Performance Bonus" for 2009 even though he got fired in 2008!

[Ram]

BTW, I don't understand this grudge against CEOs earning tons of money.......whats wrong with them getting millions of dollars if someone is willing to pay them?

Whenever a crisis happens, people always look for a scapegoat. And this time, the convenient scapegoat have been the high-paid CEOs. Thats totally unfair coz, as Shwetabh said, they didnt demand so much money. The company was willing to pay them so much for their services and expertise. Whether their expertise was good enough or not is an entirely different issue altogether.

[Ram]

I know this isnt related that much to the topic, but an analogous of this happened in India, about 8-9 years ago, when there was widespread mushrooming of Private Benefit funds. I clearly remember, as a teenager, seeing these big buildings sprout up in every corner of the city, offering insane amounts of interests on fixed deposits and promising to ‘double your money in 32 months and triple it 48 months’ and whatever not. Massive numbers of people fell for it and invested all their life-savings into it, only for these institutions to go bust VERY soon. Even some of my older relatives lost their retirement money in that. Moral of the story: Whether you’re a big investment bank of a retired govt. employee, greed ALWAYS kills.

[fineleg]

WaMu's CEO might walk away with 18 million $ for being in office for 3 weeks' date=' essentially the last 3 weeks when the company went down under.[/color'] Thats why people hate these CEOs. They shall walk away with millions and due to their (im)prudence I shall have to shell out 2500$ extra next year in taxes even though I had nothing to do remotely with subprime. !

mm/shwetabh, pls read the above pls dont say that is ok

[Rajiv]

My Cuz works at JPMC, he was pretty relaxed last week but was never optimistic

[THX_1138]

Update just in; The US govt has decided to give a $80 bn loan to AIG, in a bid to save it.

its a short term, high interest rate loan to help AIG fix its liquidity issues. will be repaid from the sale of assets. not that bad!

[THX_1138]

I have lost 12 K in my 401K this year. I plan to lose more money.

we are invested in a 6% guaranteed income fund with a relatively low operating cost. thus far, things are safe, and though my mortgage company was recently acquired by wachovia securities, things seem fine so far. sorry for your loss!

[fineleg]

we are invested in a 6% guaranteed income fund with a relatively low operating cost. thus far' date=' things are safe, and though my mortgage company was recently acquired by wachovia securities, things seem fine so far. sorry for your loss![/quote'] Investments :(( We need a under the water icon in icf

[Dhondy]

Lol at all the predictions of demise of the US as the world's financial superpower. Did you hear that German minister gloating? The USA continues to be a magnet for the best brains in the world ahead of Germany, UK or any other country in the world. Doctors lining up in india to take the USMLE, Mexicans putting their life at risk to breach the border at Tijuana, you name it. Harvard and Stanford get more foreign students than Oxbridge and will continue to do so. Europe can only look on and sigh. This crisis will be forgotten in a year. Remember the savings & loan crisis, the dotcom bust, the '87 stock market crash? The US will power on.

[THX_1138]

Lol at all the predictions of demise of the US as the world's financial superpower. Did you hear that German minister gloating? The USA continues to be a magnet for the best brains in the world ahead of Germany, UK or any other country in the world. Doctors lining up in india to take the USMLE, Mexicans putting their life at risk to breach the border at Tijuana, you name it. Harvard and Stanford get more foreign students than Oxbridge and will continue to do so. Europe can only look on and sigh. This crisis will be forgotten in a year. Remember the savings & loan crisis, the dotcom bust, the '87 stock market crash? The US will power on.

which ones are you talking about? i might not have been born then... with the exception of the dot com burst of course.

[fineleg]

Dhondy - this one is apparently different than the others, or so say folkz who have seen those. BTW - Indian doctorz cannot easily enter US - they have to use some trickz

[Dhondy]

The eighth largest bank in the UK, the Bradford & Bingley, nationalised. Share prices down to 20 pence, from their peak of £2.40. Ninety three percent of value wiped out by the carnage. For those who are not familiar with the UK, B&B, along with several other organisations, used to be mutual bodies, called building societies. In the mid to late 90s, they converted into banks one by one, resulting in windfalls for their members in the form of free shares. All of them, bar none, have been either taken over by bigger banks, or nationalised, like B&B's predecessor, Northern Rock. Once they converted to bankhood, the management felt it was necessary to generate more and more profits for shareholders, by taking greater risks in the then booming mortgage market. Result? Greater borrowing to fund risky instruments such as buy-to-let and self certified mortgages. The birds are coming home to roost. The public are part of this mess because they voted for demutualisation en-masse for the sake of a few hundred pounds in free shares. They have only themselves to blame as the taxpayer picks up the tab.

[Lurker]

The public are part of this mess because they voted for demutualisation en-masse for the sake of a few hundred pounds in free shares. They have only themselves to blame as the taxpayer picks up the tab.

The public are part of this mess all around the world including India. For almost a decade the property prices are soaring around the world. In India it has tripled in less than a decade(check any cosmpolitan city today). Whenever the issue was raised by minority concerned citizens it was always rebuffed by the majority as "This is how Capitalism works, Whats the problem in soaring property prices when there is a market for it" yada yada. Heck the people who criticized were dismissed as Communist minded. Never mind the fact that business model supporting creation of 60 lakh flats is ridiculous in a country where average income of citizen in less than a lakh. This morning Indian stock markets has taken a hit. Property prices in Delhi, Bombay, Bangalore are sceduled to come down atleast for next couple of years. Rupee has started to tank. Welcome to the party. Give yourself a pat on the back all those who thought blindly following Capitalism was a recipe for a country's progress. xxx

[Ram]

Citigroup to buy US bank Wachovia Wachovia, the fourth-largest US bank, is being bought by larger rival Citigroup in a rescue deal backed by US authorities. Wachovia customers were told the action would provide "full protection for all their deposits", and that the bank would continue to operate as normal. Under the deal, Citigroup will absorb up to $42bn (£23bn) of Wachovia losses. US authorities said the decision to back the sale had been made "under extraordinary circumstances". The comment came from the Federal Deposit Insurance Corporation (FDIC), the government body that guarantees the safety of banking deposits. "This action was necessary to maintain confidence in the banking industry given current financial market conditions," said FDIC chairman Sheila Bair. Mortgage debt Citigroup is taking on $312bn of Wachovia loans. Wachovia customers were told the action would provide "full protection for all their deposits", and that the bank would continue to operate as normal. Under the deal, Citigroup will absorb up to $42bn (£23bn) of Wachovia losses. US authorities said the decision to back the sale had been made "under extraordinary circumstances". The comment came from the Federal Deposit Insurance Corporation (FDIC), the government body that guarantees the safety of banking deposits. "This action was necessary to maintain confidence in the banking industry given current financial market conditions," said FDIC chairman Sheila Bair. http://news.bbc.co.uk/2/hi/business/7642126.stm -------------- And the consolidation continues.....

[Lurker]

^^ That to me seems to be the worst decision amongst the consolidation endeavour that we have seen in this market. Both the banks are in bad situation, specially Citigroup which has seen the largest market erosion amongst all the large banks. Plus their normal bailout messiah, the Saudi Prince, has quite literally bailed out on them this time. This seems more an effort by Feds to avoid anymore bank failures to stem the rot. As a footnote this M&A will hit Raleigh, North Carolina bad. Wachovia has done wonders for that town, making it one of the most saught after Financial market in the country. With the merger expect the HQ to move out of North Carolina taking billions in reserves, not to mention jobs, expenditure, charity contributions yada yada.

[Dhondy]

Unthinkable has happened. The rescue bill failing in front of our eyes. 226 to 207. Horsetrading going on on the floors of Senate. Catastrophe. The Dow tanked 600 points at one point. Recovering slightly.

[Dirty_South]

hahaha....581 down !!! Citigroup to Buy Wachovia Bank Units for $2.16 Billion ! Indian Stock Market's gonna crash 2morrow !!!!