my opinion, that Washington is going to bail out an investment bank. Nor should they (my emphasis)." Instead, Dimon told the listeners on the call that "We need to prepare right now for Lehman Brothers filing. And for Merrill Lynch filing. And for AIG filing. And for Morgan Stanley filing." Before each company mention Dimon paused, then paused the longest ahead of his last warning, that his employees should prepare for the potential bankruptcy of Goldman Sachs. With the stage set, Sorkin then takes
Words: 2523 - Pages: 11
companies that were experiencing similar problems as well. Perhaps the most notable government bailout before Lehman’s bankruptcy filing was that of Fannie Mae and Freddie Mac. The United States government bailed out both companies, which put the government into a receivership position and set a new precedent (Miga, 2013). Furthermore after Lehman Brothers filed for bankruptcy, the government offered AIG an $85 billion loan package to help the company stay afloat providing more cause for concern regarding
Words: 1238 - Pages: 5
layoffs & raising the unemployment rate. 2. What steps did the Federal government and the Federal Reserve take to mitigate the crisis? The Federal Reserve bailed out Bear Stearns & AIG. The U.S. Department of the Treasury seized Fannie Mae & Freddie Mac. Congress passes the economic bailout plan TARP which spent $700 billion investing in banks & bailing out the auto industry. Congress also passed an $825 billion economic stimulus package called the American Recovery & Reinvestment
Words: 489 - Pages: 2
The Guardian. The financial community "talk of the City being a national asset and a success story; of having to pay football star salaries of necessity; and that any insistence that the banks accept that they have obligations as well as rights to bailouts will be met by an exodus of talented staff to other countries," he said.[1] Billions of pounds in bonuses are expected to be lavished on bankers this year on top of hefty salaries, underlining a widening gap between rich and poor in a country where
Words: 1007 - Pages: 5
Macroeconomics - The Financial Crisis of 2008 Mason S. Clark In 2008, a sequence of bank and insurance company failures resulted in a financial crisis that effectively brought global credit markets to a halt and required unprecedented government intervention. For example, Fannie Mae (FNM) and Freddie Mac (FRE) were both taken under the control of the government. In addition Lehman Brothers declared bankruptcy after it was unable to find a buyer. Furthermore, Merrill Lynch was purchased by
Words: 6137 - Pages: 25
major factor in the US housing bubble. Prior to Lehman Brothers failure, there had already been a bailout by the US government of another large financial institution, Bear Stearns. The bailout involved the Federal Reserve insuring J.P. Morgan Chase against loses of up to $29 billion on the “ill liquid” assets it was obtaining in the purchase of Bear Stearns. This was the beginning of the bailout of the financial sector by the federal government and would reach unprecedented levels by the end of
Words: 1640 - Pages: 7
Since the 1980’s the world economy experienced many changes. Some examples are trade, technological advances, communications and information, and the global financial crisis. The U.S endured a deep recession throughout 1982. Business bankruptcies rose 50 percent, Farmers were especially hard hit, as agricultural exports declined, crop prices fell, and interest rates rose. By 1983, inflation had eased, the economy had rebounded, and the United States began a sustained period of economic growth.
Words: 624 - Pages: 3
accelerate or decrease over the next decade? Why? Financial Institutions got a bailout By President Obama in 2009, Mortgage values dropped, financial institutions begin to Feel the pressure especially firms such as Bear Stearns that specialized in trading Mortgage backed securities. There was $61.7bn in losses with AIG, strong economy Out of more jobs can accelerate the next decade, there be a budget deficit. AIG got A $180bn bailout; while Bank of America got $45bn as well as JP Morgan Chase $25bn, Goldman
Words: 2012 - Pages: 9
(Ferguson 2010). Just one week before Lehman’s bankruptcy, Fannie Mae, and Freddy Mac had to bail out with the intervention of the US Treasury and the Fed. Two days after its bankruptcy, the Fed provided $85 billion loan to American International Group (AIG) as an insurance conglomerate to prevent its failure (Elteman et al 2011, 132 – 134). Both, Fed and Treasury, argued that while Lehman could not post sufficient security in affording reasonable assurance that a loan from the Fed would be repaid, the
Words: 1132 - Pages: 5
| The 2008-2009 Credit Crises Executive Summary The Great Depression was when America faced the worst economic catastrophe in history. It wasn’t until the nineties that the financial industry started to re-invent itself for the purpose of making more money. Banks became successful at modifying legislation and creating ventures that would profit investors. The level of risk involved with the securities produced was ignored. Initially, the securities that were built were not expected to
Words: 2136 - Pages: 9
