Bailouts and buyouts

[cjsmith]

Bear Stearns got a government-orchestrated purchase.
Fannie and Freddie got a Federal takeover.
Merrill Lynch got a government-orchestrated purchase.
"The free ride is over", people said as Lehman was left out to hang.
But today AIG got an $85 billion Federal bailout.

What's with Lehman? Did Dick Fuld piss off Henry Paulson or something?

Comments

[530nm330hz.livejournal.com]

Lehman wasn't Too Big To Fail. Turns out AIG is. The interesting question is whether the AIG bailout will leave shareholders (including me) with anything but scrap paper, or whether it's just enough of a bailout to allow for an orderly unwinding of commitments to every other financial institution in existance.

[cjsmith.livejournal.com]

Bear and Merrill were both bigger than Lehman?

[530nm330hz.livejournal.com]

It's not just the size, it's how much B2B stuff they do, rather than B2C. Bear was a clearinghouse for a large percentage of inter-institutional trades; if they'd gone under the whole financial system would have been frozen for a week or two.

I don't know the deal with Merrill but I think in this case it was more a question of Merrill taking advantage of a way out before things actually reached the acute crisis stage.

[cjsmith.livejournal.com]

Ahh, so part of it is how tied in they are to the other surviving linchpins?

I do know Lehman had some offers earlier in the summer and turned them down, thinking they could do better. Guess they lost that gamble.