Danny Schechter - ColdType

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tual 150 billion dollars for the bailout of AIG. So they weren’t
even able to run their ‘no-moral hazard, we let the failure fall
story’ for even 24 full hours before they went to the rescue
of another firm. And this creates anger and hostility for years
with people thinking that government regulators are picking
winners and losers, and they have a ‘catch as-catch-can
patchwork response’ which leaves some people protected and
others free to fall to their deaths. And it was very bad for confidence,
very bad for the markets and very bad for any notion
of fairness and equity in the market.”
Over, the next ten days, the insurance titan AIG was not
allowed to fail, bailed out by the Federal Reserve to the tune
of $85 billion. (AIG paid off claims by Goldman Sachs at l00%
on the dollar to the tune of $50 billion.)
The FDIC then seized America’s largest Savings & Loan
institution, Washington Mutual, and sold its assets to JPMorgan
Chase. The two major Wall Street firms left standing voluntarily
changed their status from investment banks to bank
holding companies.
There was a bittersweet reaction on Wall Street according
to Bloomberg News:
Fuld’s defense of the 158-year-old firm ended when Barclays
Plc. and Bank of America Corp. walked away from buyout
talks, forcing the company to file for bankruptcy.
Over 14 years, Fuld, 62, turned a money-losing, bond trading
shop into a full-service investment bank. He won acclaim
from Wall Street leaders such as Lazard Ltd. chief Bruce Wasserstein,
who on June 4 called him “very able.” Fuld joined
the circle of CEOs sought-after by boards, such as the New
York Federal Reserve’s. Fuld ultimately gambled almost four
times the firm’s shareholder equity last year on mortgage
securities that he insisted were “hedged by other bets.”
“It makes me rather sad to see this organization brought to
its knees as the result of what I’ll call a lack of control, poor