UPDATE: It collapsed! Stock down to $3. Up from its lows, though, on reports that wimpy Fed is putting together another bailout package.
EARLIER: Before the weekend’s over we could see another major bank takeover. At this rate, before the year’s over, we could see the entire financial system collapse.
NYT: Investors skittish about further losses in the financial industry have pounced on the American International Group, the beleaguered insurance company that has reported some of the biggest losses in the spreading credit crisis.
With Lehman Brothers running out of options this week, investors fear that A.I.G. will face billions in additional losses because it has effectively guaranteed complex financial instruments tied to home loans whose values have plummeted. If so, it too could need to raise capital, which Freddie Mac, Fannie Mae and Lehman have demonstrated can be a vexing problem in the current market environment.
The company’s chief executive, Robert B. Willumstad, is expected to unveil a master plan Sept. 25 to turn the company around, but investors are increasingly impatient. Lehman also had promised to deliver a plan in a couple of weeks, but was forced to make an announcement this week in what proved to be an unsuccessful attempt to reassure investors.
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