Failed Financial Institutions
Here's a roll up of the current set of Wall Street failures and the aftermath. Thought I'd be amusing to put them in one place.
- WAMU - bankrupt, filed for FDIC protection, accounts bought by JPM
- Bear Stearns - sold to JPM with the backing of the Fed
- A.I.G. - propped up by the Fed under a special loan program
- Freddie Mac & Fannie Mae - under Federal conservatorship
- Lehman Brothers - filed for bankruptcy, most assets bought by Barclays
- Countrywide Financial - picked up by Bank of America right before it fell apart
- Merrill Lynch - picked up by Bank of America in anticipation of Merrill's collapse
- Fortis - nationalized by Belgium, Luxembourg, and the Netherlands
- Wachovia - first bought with an FDIC guarantee by Citi, but it looks like Wells Fargo is going to get it
I'm sure there are a few I'm missing in here, but ouch, that's a lot of death and destruction.
Federal Ownership
In the NYT piece today, David Leonhardt covers a bunch of Q&A on the latest round of government bail outs. This one seemed particularly interesting.
Fannie and Freddie are in a conservatorship; the government clearly controls them. A small part of the assets of Bear Stearns are owned outright by the Fed; it controls them.
The A.I.G. situation is a bit more complicated. It’s still a private company, not one technically controlled by the federal government. But the Fed does have the ability, clearly, to veto dividends, among other things.
And I think it’s safe to assume that the Fed also has a significant degree of power that hasn’t been fully spelled out. After all, the chief executive of A.I.G., Robert B. Willumstad, stepped down at the request of the Treasury secretary, Henry M. Paulson Jr. That may have been a request that Mr. Willumstad couldn’t refuse.
Ouch.
Economic Stimulus
While the country is pondering a stimulus package for the economy, here's an article from Time dated Dec 2, 1929 which details the plans of various Captains of Industry to bootstrap the then moribund economy. I also love how classicly written the article is, in a language we woudn't hear any more these days.