pwned

Presented without further commentary:

The "person" who spread the AIG loan rumor was Bernanke

Perhaps I didn't give Helicopter Ben enough credit. He's a crafty little bearded fella. Right after the markets dropped as the Fed unanimously decided to hold rates steady a rumor came out on the Bloomberg about the Fed extending a loan to AIG after all causing everything to return to normal as if the non-cut never happened.

BLOOMBERG TEXT:
Sept. 16 (Bloomberg) -- The Federal Reserve is considering
extending a ``loan package'' to American International Group
Inc., the insurer facing a cash shortage, according to a person
familiar with the negotiations.
The stance by federal regulators is a reversal from a
position they held as late as last night, and people with
knowledge of the talks are ``cautiously optimistic,'' said the
person, who declined to be identified because negotiations are
confidential.
The person gave no timetable for reaching an agreement or
estimate on how much money New York-based AIG would need. New
York Fed spokesman Andrew Williams declined to comment.

File under: Desperate

(if you haven't noticed the trend yet, when a financial firm says they're well-capitalized and liquid you need run in the opposite direction as fast as you can)

clipped from dealbreaker.com

Quick Predictions: WM to be bought by WFC and other probabilities

Here's what I'm thinking:
WM: Will either go bankrupt (CDS has been trading as if it already is since last week) or get wrapped up on the cheap. I would say the latter is still slightly more likely, and I am calling out WFC as the most likely suitor in a deeply discounted all-stock deal. It's the only large regional that has fared well throughout this turmoil, and they could use WM's retail and small-biz base.
AIG: The "too big to fail" arguement doesn't float anymore with the taxpayers, and it's finally getting through to Washington. You can't open the floodgates and bail out every single large firm. Furthermore, AIG is in a position to sever a limb (their toxic Financial Services unit) to save their life, and they should do precisely that. All the financial executives have ruined themselves and their employees through the hubris of trying to remain an indepent going concern against all odds. Two words for those who are left standing: Stop Loss.
Fed Move: The market is pricing in a 25bps cut, and that's what I believe will happen. I would prefer the Fed holds tight, giving the markets the financial equivalent of a suppository, but I doubt Bernanke has the guts to bear the fallout. A 50bps cut, however, will deplete ammo that the Fed will very likely need should bigger problems surface. And they certainly will.

Did everyone forget what Ken Lewis said (including Ken Lewis)?

With all the talk of BAC buying LEH, I have to wonder if everyone forgot what BofA's CEO said less than a year ago, shortly before all but dismantling all of BofA's IB infrastructure.

clipped from blogs.wsj.com Here is what Lewis, the CEO of Bank of America, had to say on the company’s conference call to discuss its third-quarter results about an acquisition or joint-venture deal to salvage the dismal performance at its investment-banking unit (where profit fell 93% to $100 million). “I never say never, but I’ve had all the fun I can stand in investment banking at the moment.” So much for the hopes of some investors that the company will make an acquisition (of a Bear Stearns, or a Lehman Brothers or UBS’s Wall Street unit) to once and for all get into the top tier of investment banks — and perhaps acquire some adult supervision for its trading operation along the way.